Economist warns rising crude oil price will hit Northern Ireland consumers
The price of crude oil has edged upwards despite world stocks reaching the highest level since before the financial crisis, according to firmus energy.
However, even a slight rise in prices is likely to be felt by consumers in Northern Ireland, one economist has warned.
After falling for three months in a row, the wholesale cost of oil has started to rise again. The firmus energy index rose by 3% in August to stand at 76.
Barclays forecast a climb in the price of Brent crude to around $65 (£41) a barrel as demand comes more into line with supply. However, there is wide consensus that the crude oil price is unlikely to bounce back its pre-recession level.
Paul Stanfield of firmus energy said: "Whatever is driving up the cost of crude, it is not a sudden evaporation of the global oil glut. Opec members Saudi Arabia, Iraq and Iran are all reported to be pumping strongly. While growth in US production has halted, it has not gone into a sharp reverse."
The oil price has been highly volatile and in the past 18 months has dropped from just over $100 a barrel (£64) to below $50 a barrel (£32).
The recent recovery was far from broadly based with the price of gas, coal and power all dropping last month. However, their decline was offset by a 6% increase in the price of oil, the dominant element within the index. Some observers believe the slight turnaround has been caused by nervous hedge funds unwinding bets on oil's continuing decline.
Royal Dutch Shell chief executive Ben van Beurden told the BBC the market was currently volatile and a sudden increase in prices was hard to foresee.
Neil Gibson, Ulster University economist, explained that oil producers no longer had the incentive to push prices up.
He said: "When oil prices go up it drives technologies like solar power and electric cars and that's not a world that oil producers want to be in."
Professor Gibson highlighted that even a slight sustained rise in oil prices would be felt by consumers in Northern Ireland.
"If you are putting 50 litres in the tank every week it soon adds up," he said.
"Some employers are starting to give pay rises and for the first time since the recession people are starting to feel materially better off, but I'm not sure that wages have risen enough to cope with the extra pressure from a rise in oil prices."