NATIONS FRET OVER RISING OIL PRICES
GROWING apprehension among oil consuming countries hallmarked market activities at the weekend, as members of the Organisation of Petroleum Exporting Countries (OPEC) projected price rally of $100 a barrel before end of the year.
The development is coming on the heels of recent rising profile of crude oil, which touched two-year highs on Friday, even as Arab oil ministers met in Cairo, Egypt, on Saturday, to discuss market situation.
Japan's economy minister, Barnri Keida said yesterday that the Far East Asian country would keep an eye on the commodity's climbing prices, while the Deputy Governor of China's Central Bank warned that inflation pressures were rising.
Chairman of Libya's National Oil Corp., Shokri Ghanem, was the latest OPEC official to forecast $100 price level. Iran and Venezuela have also said that the projection was a fair price, while Saudi Arabia, the group's biggest exporter, prefers prices hovering around $75, a level that oil has traded above since September.
'An issue for OPEC will obviously be prices edging higher,' said Bill Farren-Price, Chief Executive Officer of Winchester, U.K.-based consultants Petroleum Policy Intelligence. 'The issue is whether we're in a new rally and for now the jury's out on that. And I don't think anyone in OPEC would disagree with that.'
Brent crude oil on London's ICE Futures Europe exchange rose by 21 percent this year, and traded yesterday as high as $94.74 a barrel. Crude oil futures on the New York Mercantile Exchange gained 15 per cent so far this year.
Ghanem told reporters on Friday that oil prices would rise to $100 a barrel. He was speaking in Cairo ahead of a meeting of the Organisation of Arab Petroleum Exporting Countries. OAPEC, as the Arab group is known, which includes several OPEC members – the broader 12-nation group that influences prices by setting supply quotas.
Japan, the world's third-largest oil consumer after the U.S. and China, has been monitoring rising crude and gasoline prices, going by a statement from Keida.
'I've realised myself that it's becoming very expensive,' Kaieda said at a media conference in Tokyo. 'We need to keep an eye on this. It's unlikely this trend will continue.'
Japan depends on oil imports for almost all of its needs. Five Middle Eastern OPEC nations supplied about 77 per cent of Japan's crude purchases last year, according to U.S. Energy Department data.
China's Central Bank said inflation pressures have been rising and inflation expectations remained strong, according to a statement posted to the People's Bank of China website yesterday, citing Deputy Governor Hu Xiaolian.
OAPEC was established in 1968 to foster the development of the petroleum industry in member states as part of an economic integration plan among Arab countries. It contains seven nations that are also within OPEC.
OPEC, which accounts for 40 per cent of global oil supply, decided at its last meeting in Quito, Ecuador, on December 11, to maintain its production target of 24.845 million barrels a day, set in 2008. OPEC's next formal meeting is scheduled for June 2011.
Market conditions will determine whether OPEC would increase production quotas next year, Ghanem said, without specifying a timeframe.
According to him, he's 'not happy' with OPEC's quota compliance, urging fellow members to adhere more strictly to it. Members are achieving about 60 percent of a pledged 4.2 million barrel-a-day supply reduction, he said.
Libya, Saudi Arabia, Qatar, Kuwait, Iraq, the United Arab Emirates and Algeria are all members of both OPEC and OAPEC.
'Demand is picking up, there's an uneven global economic recovery and while that doesn't mean everything is plain sailing, people believe the market is moving in the right direction,' Farren-Price said.
Global oil consumption is expected to rise to a record level next year, according to the Paris-based International Energy Agency and other forecasters.
Saudi Arabian Oil Minister, Ali al-Naimi arrived in Cairo on Friday without commenting to reporters.
He said in Quito on December 11 that oil prices at $70 to $80 a barrel was a good price, that the market as stable and supply and demand are in balance, while Kuwaiti Oil Minister, Sheikh Ahmad al-Abdullah al-Sabah said then that he was satisfied with prices around $90 a barrel.
Qatar's Oil Minister, Abdullah bin Hamad al-Attiyah has said that oil in the $80s is best for producers and consumers. Algerian Oil Minister Youcef Yousfi said at a conference in Doha on December 1 that the market was in a 'normal situation' and prices were likely to be stable for months.
Some Wall Street strategists, including Goldman Sachs Group Inc., Morgan Stanley, JPMorgan Chase & Co. and Bank of America Merrill Lynch expect prices will return to $100 for the first time in two years, during 2011, amid rising global demand.