Oil prices to stay high in Q4, fuelling need for OPEC output hike - CGES UPDATE |
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Mon, 22 Oct 2007 12:49
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(Updates details)LONDON (Thomson Financial) - The Centre For Global Energy Studies said oil prices will remain high this winter due to lack of supply in the market, and has called on OPEC to increase production.Inventories of crude oil in OECD countries declined by around 300,000 barrels per day in the third quarter, although the summer months are typically a time for stockpiles to be replenished ahead of the peak demand winter season, it said.Current OECD commercial stock cover stands at around 53.5 days, the CGES said, which OPEC claims is comfortable. However, the CGES claims the counter-seasonal draw in stocks earlier in the year points to further market tightness to come.The think tank said: 'The output increase announced recently by OPEC is too little, too late to bring prices down this winter. The world has been kept short of oil this year and stocks have fallen counter-seasonally in the third quarter of 2007.''Global oil production has barely increased over the past two years, while demand has risen by more than 1 mln bpd.'Without more oil from OPEC, prices will continue to rise over the winter.'The think tank also called for refinery upgrades to keep pace with growing demand for motor fuel.Oil recently hit an all-time high above 90 usd in New York.In September, OPEC pledged to increase output by 500,000 bpd as of November 1 2007. However, this is unlikely to be sufficient to keep pace with rising demand, the CGES said.'To bring the oil price down from its current level, OPEC's members need to put more oil onto the market and allow commercial inventories to be replenished,' it said.The market will need to keep a close eye on the outcome of OPEC's upcoming summit in Riyadh, and on the extent of its production uplift in November, it said.The impact of an expected slowdown of US economic growth, tanker freight rates and stock levels will also be key indicators of the future direction of prices.d.sheppard@thomson.comds1/ds1/rw/har/jlcCOPYRIGHTCopyright Thomson Financial News Limited 2007. All rights reserved.The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
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Oil prices to remain high this winter; calls on OPEC to raise production - CGES 