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OPEC oil prices rebound, uncertainty remains

(Xinhua)
Updated: 2009-08-31 23:50

VIENNA:The OPEC weekly average price rebounded to $71.42 per barrel last week after a two-week slide, but the outlook for oil prices remained uncertain, the Vienna-based cartel said Monday.

Last week, the Organization of Petroleum Exporting Countries' oil price fluctuated constantly: it started with a higher price on Monday, but declined consecutively for three trading days. On Friday, it rebounded again.

The range of price fluctuations, however, remained within $1.20, indicating the market forces that support and push down prices remain relatively stable, analysts say.

According to US government departments, the US economy improved in the second quarter as unemployment fell, personal spending increased slightly, consumption in durable goods increased, and house sales increased.

These supported the prospect of a US economic recovery, which would drive up oil prices.

However, this was countered by the government's huge budget deficit, the prospect of difficulty in rapid recovery of personal consumption due to high unemployment rate, as well as the risk of higher mortgage default rates for financial institutions, which would delay a US economic recovery.

These opposing signals resulted in the fluctuating international oil prices.

Since there is no major change in supply and demand in the international oil market, the US dollar exchange rate will still affect oil prices significantly for a period of time.

With the slide in dollar index, the overall trend of international oil prices may be to keep rising, analysts say.

Meanwhile, an OPEC ministerial meeting will be held on Sep 9 in Vienna to discuss future oil production quotas. In view of rising oil prices, some OPEC member countries had reportedly been quietly increasing production.

Some officials of OPEC members were also satisfied with recent oil prices, hoping that the current supply and demand could be stabilized.

The upcoming OPEC meeting is expected to determine the new oil production ceiling, which will have a major impact on the international oil prices for some time to come, analysts say.