Relief at Oil Prices
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.