Relief at Oil Prices

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Standard Chartered Bank, has released a statement that has brought smiles to many faces. The market has seen an increase in the supply of oil, and it is therefore expected, that the price of oil might lower in 2007. On Wednesday, Helen Henton, head of the commodity research department, said that even though the oil prices are expected to lower, political tensions could cause unforeseen spikes in the price of oil. Although global growth is also expected to slow, it will not reflect on the demand for oil, which is expected to keep growing throughout 2007.

Henton also stated that the oil demand predictions for the coming year, is attributed to various reasons, such as a higher oil demand that is expected from China, as domestic prices will encourage the importers to increase their supplies. On the whole, Standard Chartered predicts that the average spot price, from Dubai, for 2007 is expected to be $52 per barrel, which is a substantial price drop from last years price, which was $61 per barrel. A further lower in prices is predicted for the second quarter of the year, which is expected to be approximately $50 a barrel, and then a slight increase, in the fourth quarter, to approximately $53 per barrel.

An outstrip is expected, in the growth of the oil demand, from the oil suppliers which are non-Opec members. Opec, which is the Organisation of the Petroleum Exporting Countries. The non-Opec members include the countries of Brazil, Russia and Azerbaijan.

Opec is the largest oil supplier, which supplies almost half the world with oil, and is an organization of twelve oil producing nations. After last year, when Opec met to cut supply due to the oil price falling below $60 a barrel, Henton said that it can be expected that Opec will try to prevent that oil prices decrease below $55 a barrel. Last year, Brent was trading at an average of between $57 to $78 a barrel. On the opening of the market in New York, yesterday, the price of the delivery destined for February, saw that Brent at London’s ICE Futures exchange, closed at $60.44 per barrel, after falling 42 cents. The predictions made by Standard Chartered, expects to see a more long term price, or even a medium price range, of approximately $45 per barrel.

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