Oil prices rebound or strengthen OPEC's determination to increase production

oil prices are high again, certainly not good news for the global economyHowever, if viewed, as OPEC's ministerial meeting next month approaches, a return to high oil prices could also strengthen OPEC's determination to increase productionoil prices have been shakenin fact, the recent oil price slower and almost below the $90 mark, from the high of $99.29 hit in the middle of this month, about $9Such a rapid decline has also led some to speculate that OPEC, which is already divided on the issue of production increases, may not increase production "in the water"Analysts' expectations of a rise in crude oil prices to $100 a barrel quickly cool edlower as oil prices continue to fall, a situation that puts OPEC in a "dilemma" when it meets on May 5With this week's drop in oil prices largely driven by expectations that OPEC will announce further production increases, OPEC may either announce production increases as scheduled or it may have to watch the "stimulus" reboundfrom the statement simply by OPEC boss Saudi Arabia, the group does not appear to be keen to announce another increase at next week's meetingThe country's oil minister, Naimi, reiterated this week that oil-producing countries are out of control and that at least 40 per cent of the current oil price is caused by the continued weakness of the dollar, speculation and geopolitical problemsHe went so far as to say that if oil prices rise to $100 a barrel, it has little to do with market supply and demanddenied suggestions that OPEC was likely to raise its cap on crude oil production by 500,000 to 750,000 barrels a day at next week's ministerial meeting, saying it was in good shape for global crude supplies todayHowever, some analysts note that OPEC officials made similar statements before the last ministerial meeting, and the market was confident that OPEC would not adjust productionBut with oil prices up nearly 7 per cent in just seven days, OPEC ministers have finally agreed to raise production caps by 500,000 barrels a day, effective November 1Analysts point out that, given the current situation, OPEC's decision at next week's meeting may be directly related to the movement of oil prices before the meetingJust yesterday, news of the U.Spipeline explosion rekindled the enthusiasm of the oil marketWith that momentum, OPEC will have to do some what it says at next week's meetingoil prices will remain high next year
traders and analysts expect them to fall back from their recent record highs and reach near $80 by the start of next springIn the medium to long term, however, oil prices are likely to remain highDeWan, an analyst at PFC Energy, aconsultancy, said the impact of this year's rise in oil prices, including continued demand growth and a weaker dollar, would be offset by depressed market conditions by February next yearHe thinks oil prices will fall slightly, but not by muchSome economists believe that the U.Ssubprime mortgage storm has hit credit markets hard and will drag the U.Seconomy into recessionThat would dampen oil demand from the US, the world's largest oil consumer, and could slow growth in other countries, including Chinamany OPEC officials are hesitant to increase production, as well as economic cooling concernsSome OPEC sources have warned that economic growth in developed countries will slow, leading to a slump in demand and a plunge in oil pricesPFC Energy expects average oil prices of around $80 a barrel next year, meaning they will fall sharply from current levelsIn recent weeks, many institutions have raised their forecasts for average oil prices next year, with the prevailing view now being around $78It is important to note that this marks a significant increase in the average price of crude oil, not a declineThis trend has continued in recent years, with the average price of light, low-sulfur crude oil futures in the U.S this year at just over $70, compared with $66.25 in 2006 and $56.50 in 2005 oil prices are high again, certainly not good news for the global economy However, if viewed, as OPEC's ministerial meeting next month approaches, a return to high oil prices could also strengthen OPEC's determination to increase production oil prices have been shaken in fact, the recent oil price slower and almost below the $90 mark, from the high of $99.29 hit in the middle of this month, about $9 Such a rapid decline has also led some to speculate that OPEC, which is already divided on the issue of production increases, may not increase production "in the water" Analysts' expectations of a rise in crude oil prices to $100 a barrel quickly cool edlower as oil prices continue to fall, a situation that puts OPEC in a "dilemma" when it meets on May 5 With this week's drop in oil prices largely driven by expectations that OPEC will announce further production increases, OPEC may either announce production increases as scheduled or it may have to watch the "stimulus" rebound from the statement simply by OPEC boss Saudi Arabia, the group does not appear to be keen to announce another increase at next week's meeting The country's oil minister, Naimi, reiterated this week that oil-producing countries are out of control and that at least 40 per cent of the current oil price is caused by the continued weakness of the dollar, speculation and geopolitical problems He went so far as to say that if oil prices rise to $100 a barrel, it has little to do with market supply and demand denied suggestions that OPEC was likely to raise its cap on crude oil production by 500,000 to 750,000 barrels a day at next week's ministerial meeting, saying it was in good shape for global crude supplies today However, some analysts note that OPEC officials made similar statements before the last ministerial meeting, and the market was confident that OPEC would not adjust production But with oil prices up nearly 7 per cent in just seven days, OPEC ministers have finally agreed to raise production caps by 500,000 barrels a day, effective November 1 Analysts point out that, given the current situation, OPEC's decision at next week's meeting may be directly related to the movement of oil prices before the meeting Just yesterday, news of the U.S pipeline explosion rekindled the enthusiasm of the oil market With that momentum, OPEC will have to do some what it says at next week's meeting oil prices will remain high next year
traders and analysts expect them to fall back from their recent record highs and reach near $80 by the start of next spring In the medium to long term, however, oil prices are likely to remain high DeWan, an analyst at PFC Energy, a consultancy, said the impact of this year's rise in oil prices, including continued demand growth and a weaker dollar, would be offset by depressed market conditions by February next year He thinks oil prices will fall slightly, but not by much Some economists believe that the U.S subprime mortgage storm has hit credit markets hard and will drag the U.S economy into recession That would dampen oil demand from the US, the world's largest oil consumer, and could slow growth in other countries, including China many OPEC officials are hesitant to increase production, as well as economic cooling concerns Some OPEC sources have warned that economic growth in developed countries will slow, leading to a slump in demand and a plunge in oil prices PFC Energy expects average oil prices of around $80 a barrel next year, meaning they will fall sharply from current levels In recent weeks, many institutions have raised their forecasts for average oil prices next year, with the prevailing view now being around $78 It is important to note that this marks a significant increase in the average price of crude oil, not a decline This trend has continued in recent years, with the average price of light, low-sulfur crude oil futures in the U.S this year at just over $70, compared with $66.25 in 2006 and $56.50 in 2005 (unknown)