Oil prices boosted by rate cut.
Global oil prices increased to more than $70 per barrel after hitting a 17-month low, and analysts say it is because of both the U.S. Federal Reserve cutting interest rates to 1 percent and a fall in the value of the U.S. dollar.
On concerns of the United States leading the rest of the world into a deep recession, the Federal Reserve called for another rate cut, RTE Business reported.
Oil prices have fallen by more than 50 percent since peaking at nearly $150 per barrel in July. Now, recession fears have caused a dramatic drop in demand, sinking prices despite production cuts by the Organization of Petroleum Exporting Countries.
The hope of the Federal Reserve is that the most recent cut to the interest rate will help to boost demand for commodities and the price for producers.
Another suggestion by analysts regarding the cause of the price increase is that the U.S. oil reserves did not grow as much as expected.
The U.S. Department of Energy said its crude reserves rose by 500,000 barrels in the week that ended Oct. 24, much less than the expectation of a 1.6 million barrel increase.
IEA says draft World Energy Outlook is misleading.
The Financial Times reported that a draft of the latest World Energy Outlook from the Paris-based International Energy Agency suggested global production of oil could fall by 9.1 percent over the next year without new investments.
But the IEA responded to the article, saying the Financial Times was quoting a draft of its upcoming report and that the numbers can be misleading and should not be directly quoted, The Guardian reported.
In its draft, the IEA suggests that oil-producing nations are having trouble finding capital financing for new oil projects because of global economic concerns and recession fears as well as the dramatic drop in oil prices recently.
The IEA draft may be more accurate than the agency is portraying, as the Organization of Petroleum Exporting Countries is saying the same thing.
"I'm seeing a lot of projects being postponed because the finance is no longer there," Qatar's Oil Minister Abdullah al-Attiyah said recently.
Until recently, OPEC had plans to invest $160 billion over the next few years on projects to expand capacity.
"If prices decline, most of our projects will be either delayed or canceled," said OPEC Secretary-General Abdalla El-Badri.
Shell posts record profits.
Royal Dutch Shell joined a growing list of oil giants to post record third-quarter profits after oil prices hit record highs in July at nearly $150 per barrel.
Shell announced its profits were $10.9 billion for the last three months. That is a 71 percent increase over the same quarter last year, even though the company's production dropped by 1 percent with rig and refinery damage in the Gulf Coast during hurricane season, The Scotsman reported.
Shell's announcement followed that of its rival BP and many others that benefited from high oil prices.
Since oil prices have fallen so dramatically, oil companies, including Shell, are keep a close eye on the economy as they decide what to do with those earnings.
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Closing oil prices, Oct. 30, 3 p.m., London
Brent Crude oil: $59.53
West Texas Intermediate crude oil: $64.28
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