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There may be light at the end of the tunnel for oil producers. Oil prices reached a three-month high Wednesday, after government data revealed surprisingly strong demand for diesel and gasoline.
Light, sweet crude rose $1.79, up 4.9%, at $38.29 a barrel on the New York Mercantile Exchange. Brent rose $1.42 to $41.07 a barrel, a 3.6% increase—both the highest since Dec. 4 of last year.
Coming off a month-long rally, the latest prices could mean oil is finally starting to pick up after two years of rock-bottom prices, the Wall Street Journal reports.
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Economists cautioned not to get too hot on oil, however. There's still so much supply that it will take a while for prices to jump significantly (not until next year, economists said recently)—even with an uptick in demand.
Gasoline futures also rose 6% to $1.47 a gallon, the highest since Aug. 31, good for a 64% gain over the last month. Diesel futures also saw a healthy surge, rising 2.7% to $1.23 a gallon, capping a 42% gain over the same period.
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“There’s reason to be optimistic, albeit there’s a lot of crude still in storage,” Tim Pickering, president of Auspice Capital Advisors, says. There’s also hope supply could be stemmed if major producers reach an agreement capping production, but there are still major disagreements between Kuwait, Russia, Iran and Saudi Arabia over the terms of a deal. [WSJ]
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