Brent crude oil futures rose above $124 per barrel on Apr. 21 after falling US crude stocks signaled a pickup in demand ahead of the summer driving season. Analysts had forecast crude stocks to rise amid reports refiners were trimming runs on slow demand tied to a shaky US economic recovery. Further contradicting that, the US dollar plunged against the euro last week as equity prices staged a recovery - a sign that the world's biggest economy is starting to pick up. A weak dollar is at the same time luring the funds back into dollar-denominated oil, which has become a less expensive investment compared to commodities priced in other currencies. International Energy Agency Executive Director Nobuo Tanaka last week warned that global demand was already suffering from high prices and urged OPEC to raise output from June to stem further price rises. But the latest figures suggest demand destruction is not yet happening in the US on any large scale. A geopolitical risk premium of $15/bbl-$20/bbl is figured into current prices and is likely to stay in place until Libyan oil exports resume flowing (p4).
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