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Oil: The drop in OPEC supply should not stabilize prices in the short term  

 


The decline in production by OPEC decided Friday to short-term risk of not being able to stop the fall in prices of black gold, undermined by concerns about economic recession, but could in the longer term sow the conditions for a sharp rebound in prices. The price of crude fell by almost 60% in three and a half months, from 147.50 dollars a barrel on July 11 to 61 dollars Friday, dragged into the downward spiral in world markets. The Organization of Petroleum Exporting Countries (OPEC) met in emergency Friday to try to stem the plunge in prices, but its decision to withdraw 1.5 million barrels per day (MBD) market from 1 November should not achieve short-term stabilize prices, analysts forecast.

 

On the other hand, bad economic news accumulates in the United States and Europe, bad omens for energy consumption, even while emerging countries like China or India, engine oil demand this recent years, are
affected by the crisis.
In addition, surging oil in early 2008 was partly fueled by an influx of investors who saw the oil assets with strong financial performance and a good hedge 'against the fall in the dollar. In contrast, the rollover of the oil market in mid-July is largely due to an "exodus of purely financial investors. The OPEC might be tempted to further strengthen its offer. She warned that it POPR meet as often as. Possible and could act if necessary before its next meeting, scheduled in Oran in Algeria on December 17.
Not to mention that in the longer term, reducing production announced Friday would inevitably lead to renewed tension between supply and demand. While. The exploitation of new oil deposits is expensive, courses lasting
Netherlands could also call into question many projects launched in recent months to try to cope with strong demand from emerging countries.
 
Source: AMI/PMD  

 
   

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