OPEC weekly oil price rises to nearly 85 dollars

09:10, November 16, 2010      

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The weekly average price of the Organization of Petroleum Exporting Countries (OPEC) kept rising to 84.86 U.S. dollars per barrel last week, hitting the record high of this year, the Vienna-based cartel said Monday.

OPEC's weekly average oil price has kept rising for three consecutive weeks.

It continued to rise during the first four trading days last week, reaching above 85 dollars a barrel on day 10 and 11. But on the last trading day last week, it declined significantly from 85.81 dollars per barrel to 83.67 dollars, or fell by 2.49 percent.

Depreciation of the U.S. dollar is the main reason for rising in oil prices.

On the other hand, as figures of China showed an inflation of the Chinese economy last Thursday, speculations arose that the Chinese central bank would further hike interest rates or take other measures to curb China's economic growth, leading to a drop in international oil prices.

However, analysts believe that the weak U.S. dollar and the expectation of the world's major economies forced to introduce the quantitative easing policy will result in an excess supply of money and overly abundant global liquidity will no doubt push up the global commodity prices including crude oil.

The dollar index has kept decreasing from 88 point since early June this year, while the Fed's decision of a new round of quantitative easing policy this month exacerbated its decline.

Impacted by the continual depreciation of the U.S. dollar, the central bank of Japan has already announced in October a reduction of its interest rate.

Affected by the two major economies' currency devaluation, the EU's exports were severely suppressed. The possibility is increasing that the EU could follow the suit of the U.S. and Japan to implement a quantitative easing policy.

In addition, as winter approaches, the weather becomes an increasingly important factor of oil market speculation. Recently, the argument that Europe may have a cold winter for "once in thousand years" is widespread.

However, figures show that, due to the slow global economic recovery and the high U.S. oil inventories, the world crude oil supply remains relatively plentiful. According to OPEC's monthly oil report, there is an excess supply of global crude oil by 2010.

Therefore, the financial factor and market speculation would continue to be important factors affecting the international oil prices for a certain period of time.

Since August this year, the crude oil futures prices have risen by about 20 percent.

Source: Xinhua


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