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OPEC output rises, US supplies may lead to lower oil price
Published on July 31, 2010 by oilprices · No CommentsCrude oil prices oil may fall next week amid recent increases in US oil supplies and rising oil output from OPEC member countries could all point the way to lower prices.
In a recent survey by Bloomberg, 15 of 36 analysts, or 42 percent, forecast that oil prices will decline through August 6th, with 12 respondents, or 33 percent, predicted that oil prices will rise, and 9, or 25 percent, forecast prices would be little changed.
Crude oil inventories climbed 7.31 million barrels to 360.8 million last week, a US Energy Department report showed. Crude oil imports increased 12 percent to 11.2 million barrels a day, the highest level since August 25th 2006. Imports in states along the Gulf of Mexico jumped to a record 7.21 million.
“Rising inventories and rising OPEC production point to an ongoing surplus and downward risk for prices,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York.
OPEC oil output increased for the third time in four months in July, led by gains in Iraq, the one member not subject to a quota. OPEC production rose by 80,000 barrels, or 0.3 percent, to an average.
“There’s a fear of a slowdown in economic growth which will go on for the next few weeks,” said Gerrit Zambo, a trader at Bayerische Landesbank in Munich. “Investors are likely to be disappointed with the economic data and oil will come down a bit. It’s more likely to go below $70 than above $80.”
OPEC Member Countries Could Lead the Way to Lower Oil Prices
Oil prices may fall more than expected on a risk that OPEC member countries won’t adhere to oil production targets, US bank JPMorgan commented.
“If demand drops, the Gulf Trio, Saudi Arabia, Kuwait and the United Arab Emirates are likely to demand cuts from ‘leaky’ members to rebalance the market, but any delay in response risks a fall in oil prices as low as $50 a barrel,” said Lawrence Eagles, an analyst JPMorgan.