The market celebrates the decline in the
price of oil; however some analyst warn the lower pricing
cycle may be short lived. The International Energy Agency
lowered global oil demand forecasts for 2008 and 2009. But
for 2009, the oil demand is likely to rise to 87.6 million
barrels per day - 140,000 barrels lower than last month's
estimate.
If the rising dollar trend continues into
next year, the oil price could drop in the $80's. "The data
suggest that the demand impact of weaker economic conditions
and high prices during the summer -- when oil prices reached
an all-time peak -- was more marked than expected, notably
in the United States. Furthermore, the effects of the
ongoing hurricane season on U.S. demand are subject to
considerable uncertainty," the IEA said.
"On the whole, it seems that OPEC is
committed to defend the price of around $100 level,
especially following recent calls from several member
states that it was the minimal acceptable price," said
Andrey Kryuchenkov, an analyst at Sucden Research, in a
research note.
Source: IEA, Reuters & CBS
Iranian
official has said continued OPEC production at current levels
would lead to over-supply of its crude the the first half of
2009. Despite the recent announce of recent production cut by
OPEC, the price of October crude oil dropped to $102.68 on
Wednesday, September 10th. OPEC officials took a strong
stand to defend $80 per barrel as it was the production cost
cited for some new fields.