OPEC will probably decide against boosting oil supplies next month as concerns over slower economic growth may weaken demand for crude, according to the Center for Global Energy Studies.
There's only a 3 percent likelihood that the Organization of Petroleum Exporting Countries will raise production when it convenes in Vienna on Sept. 11. At the same time, there's a one- in-five chance an economic slowdown will cut oil demand by 500,000 barrels a day, the center said in a report today.
``OPEC does not seem, at the moment, to be contemplating an increase in supplies at its September meeting,'' the CGES said. ``If oil demand weakens, OPEC will see this slowdown as justification for its stance.''
The 12-nation group, which produces 40 percent of the world's crude, is partway through an announced production cut of 1.7 million barrels a day.
Crude oil futures in New York plunged 3.2 percent to a five- month low of $70.10 a barrel on Aug. 16 amid concerns that loan defaults in the U.S. would ripple through financial markets and curb world economic growth.
The possibility of OPEC raising output by 500,000 barrels a day is as likely as a sustained disruption of supplies from Iran, the group's second-biggest member after Saudi Arabia, according to the report.
``With the likelihood of lower economic growth now looming,'' the probability of a ``considerable'' slowdown that would harm oil consumption is ``much higher than before,'' the center said.
If no economic slowdown occurs and OPEC withholds extra supply, the price of Brent, Europe's benchmark blend, could rise to as much as $100 a barrel in the third quarter of next year, the center said.
There's only a 3 percent likelihood that the Organization of Petroleum Exporting Countries will raise production when it convenes in Vienna on Sept. 11. At the same time, there's a one- in-five chance an economic slowdown will cut oil demand by 500,000 barrels a day, the center said in a report today.
``OPEC does not seem, at the moment, to be contemplating an increase in supplies at its September meeting,'' the CGES said. ``If oil demand weakens, OPEC will see this slowdown as justification for its stance.''
The 12-nation group, which produces 40 percent of the world's crude, is partway through an announced production cut of 1.7 million barrels a day.
Crude oil futures in New York plunged 3.2 percent to a five- month low of $70.10 a barrel on Aug. 16 amid concerns that loan defaults in the U.S. would ripple through financial markets and curb world economic growth.
The possibility of OPEC raising output by 500,000 barrels a day is as likely as a sustained disruption of supplies from Iran, the group's second-biggest member after Saudi Arabia, according to the report.
``With the likelihood of lower economic growth now looming,'' the probability of a ``considerable'' slowdown that would harm oil consumption is ``much higher than before,'' the center said.
If no economic slowdown occurs and OPEC withholds extra supply, the price of Brent, Europe's benchmark blend, could rise to as much as $100 a barrel in the third quarter of next year, the center said.
Via: Bloomberg
