New Report Suggests No Relief From High Oil Prices

Posted In: Commodities, Economy, Energy, Middle East, Natural Resources, OPEC, Oil, Speculators

According to global news agency Agence France-Presse, leading energy consultants are forecasting oil prices will remain high in 2008 due to tight supplies and despite fears of a weakening U.S. economy. Consultants at the London-based Centre for Global Energy Studies also used their December report to attack the Organization of the Petroleum Exporting Countries (OPEC), saying that the oil cartel deliberately restricted oil production in 2007 to prevent prices from declining.

The CGES said earlier today that:

Although oil production at last appears to be rising, oil prices are expected to remain high over the winter and into 2008, despite fears about the true state of the US economy.

Regarding OPEC, the energy analysts pointed out:

This year OPEC deliberately kept the world short of oil in order to avoid a repeat of last year’s autumn price fall, a policy that has been extremely effective from the organisation’s point of view…

As a result of OPEC’s supply restraint, global oil inventories are expected to fall by 425,000 bpd (barrels per day) this year and it is difficult to see how this, combined with strongly rising prices, can be described as a market that is well supplied, as OPEC has repeatedly claimed.

In a post from December 12 I noted that Goldman Sachs, the most active investment bank in the energy markets, is also forecasting higher crude oil prices in 2008, buoyed by restricted production levels. Goldman analysts are predicting an average of $95 a barrel next year.

OPEC, which produces about 40% of the world’s crude, has insisted it was not responsible for the price of crude soaring to almost 100 dollars a barrel in 2007. Rather, the cartel said that speculators were to blame for the spike in prices.

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