Oil Prices to Remain Stable till ’09 End
MUSCAT Oil demand will make a partial recovery in the months to come amid expectations that prices will witness relative stability to remain in the range of $50 per barrel, analysts say.
However, an extension of low demand and falling prices in the wake of global financial crisis has also not been ruled out.
Oil industry observers say that the Organisation of Petroleum Exporting Countries’ (Opec) decision to effect a new cut in supply will contribute to the rebound in prices, though this was opposed by some who argue that the cut will not be effective.
“A decline in worldwide crude demand was expected in the wake of the global financial crisis that engulfed the whole world especially the United States of America, the largest oil importer and consumer,” oil expert Dr Juma Al Gayalani says.
“Events in the US economy will have a significant impact on world economy including oil prices in the short term. But prices are expected to witness some improvement and will remain in the range of $50,” he says and adds: “The ball is still in the Opec’s court because its decision to further reduce production will have a positive impact on the market”.
According to Lui Bataniah, deputy director-general of investment and development in Oman Arab Bank (OAB), the decision of Opec and other oil producing countries to cut output, accompanied by other actions such as putting a stop to investment in establishment of oil refineries and exploration, shows that production is at stable levels.
“Volatility of oil prices is linked to several factors like economic conditions, psychological factors, global demand and the strategic stock of oil-importing countries such as America and China”, he said.
“Many countries have started stockpiling large quantities of oil in a move to build stocks to deal with a price rise or interruption in supply due to political or economic disturbances. All this will help the survival and the stability of prices at current levels”, he said.
Dr Badruddin Abdul Rahman, Dean of the Modern College of Commerce and Science said: “The continuous decline in global demand will affect prices.”
However, an extension of low demand and falling prices in the wake of global financial crisis has also not been ruled out.
Oil industry observers say that the Organisation of Petroleum Exporting Countries’ (Opec) decision to effect a new cut in supply will contribute to the rebound in prices, though this was opposed by some who argue that the cut will not be effective.
“A decline in worldwide crude demand was expected in the wake of the global financial crisis that engulfed the whole world especially the United States of America, the largest oil importer and consumer,” oil expert Dr Juma Al Gayalani says.
“Events in the US economy will have a significant impact on world economy including oil prices in the short term. But prices are expected to witness some improvement and will remain in the range of $50,” he says and adds: “The ball is still in the Opec’s court because its decision to further reduce production will have a positive impact on the market”.
According to Lui Bataniah, deputy director-general of investment and development in Oman Arab Bank (OAB), the decision of Opec and other oil producing countries to cut output, accompanied by other actions such as putting a stop to investment in establishment of oil refineries and exploration, shows that production is at stable levels.
“Volatility of oil prices is linked to several factors like economic conditions, psychological factors, global demand and the strategic stock of oil-importing countries such as America and China”, he said.
“Many countries have started stockpiling large quantities of oil in a move to build stocks to deal with a price rise or interruption in supply due to political or economic disturbances. All this will help the survival and the stability of prices at current levels”, he said.
Dr Badruddin Abdul Rahman, Dean of the Modern College of Commerce and Science said: “The continuous decline in global demand will affect prices.”
quoted from: Oman Tribune
