Led by a global recovery, reduced production, and dollar weakness, oil prices reached above $80/bbl in October for the first time in over a year. The United States and China posted their best growth figures in a year during the third quarter, signaling an end to the global recession. The prospect of a broader recovery has been the main driver of rising crude prices, which have more than doubled from their crisis low of $32.40/bbl. However, the sustainability of growth beyond government stimulus is uncertain and this raises concerns over future oil demand. The Organization of the Petroleum Exporting Countries’ (OPEC) agreement last year to cut oil production hasn’t been a major contributor to rising prices as inventory levels have remained elevated, but the cartels’ commitment to maintaining those benchmarks in spite of the opportunity for profits has been a factor supporting the price. Indeed, a consensus by the oil producing nations to raise output could bring about an end to the current rally as the increased supply may outweigh demand. The recent appreciation in “black gold” has also been attributed to greenback weakness as the two remain inversely correlated. Therefore, the dollar’s direction must be taken into consideration when determining future oil prices.

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Forecast for Crude Oil