Hanglung Group Oil Prices Threatening Recovery

Online, March 14, 2011 (Newswire.com) - "Hanglung Group" analysts believe that a distinct historic correlation between US recessions and spikes in the price of crude oil stands a very real chance of repeating should the civil unrest in the Middle East and North African regions continue.

"Oil prices have a significant impact on production and transportation costs in the US due to its size. If the cost of fuel reaches $4 a gallon, the private sector could contract dragging the economy back into recession," said a "Hanglung Group" oil analyst.

Although the investment house's outlook for oil has been bullish, it says that the dynamic within the market has changed to reflect the fact that investors are now far more concerned about lower supplies than they've been about rising demand and it expects oil prices to move higher from current levels if the disturbances in the affected regions persist.

"After oil plunged from its record $147 a barrel in the summer of 2008 to just over $30 within 6 months, many commentators used phrases like "demand destruction" to back suggestions that oil wouldn't return to those heady highs for at least 5 years. They obviously failed to factor in Chinese and Indian economic growth," said the "Hanglung Group" analyst.