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Is high oil price still a problem? Many people thought the problem of high oil prices should have gone away by now. Either a reduction in the terrorism premium,a withdrawal of speculative money,a slowdown in Chinese demand or an increase in Opecproduction should have reduced the crude price to more normal levels. But here we are again with US crude oil futures nudging $53 a barrel. Adnan Shihab-Eldin,Opecs acting secretary-general,even said yesterday that the price could hit $80 if a major supply disruption were to occur. The recent spike has been associated with cold weather in Europe and the US north-east,and some brief disruptions at US refineries yesterday. Gasoline prices also surged to a record high on Wednesday after some disappointing US inventory numbers. But Jeffrey Currie,the Goldman Sachs analyst,says the spike has its origins in the recent improvement in economic data which saw the global leading indicator turn up for the first time in 10 months. That brought speculative interest back into many commodity prices. Currie says many speculators had got out of commodity positions in the third and fourth quarters of 2004 and were shortearly this year. The change in their position quickly added $3-$4 a barrel to the crude price. Although Opec might be tempted to increase production,Currie says the oil price is more of a refinery problem than a production problem. Refineries lack the excess capacity to absorb the kind of oil Opec produces. | 
