OPEC oil price continues to rise slightly

The weekly average price of the Organization of Petroleum Exporting Countries (OPEC) continued to increase over last week, reaching 112.12 U.S. dollars per barrel, the Vienna-based cartel said on Monday.

OPEC oil price has been on the rise for two consecutive weeks, but last week's gains of less than three dollars showed a weakened upward trend compared with the four-dollar rise the week before.

The strong U.S. dollar and the debt crisis in Europe have been believed the two major factors impacting the oil prices.

By on July 12, exchange rate between euro and dollar had dropped to around 1:1.4, reaching its lowest level over the past seven weeks.

Speculations over a third round of quantitative easing monetary policy by the Federal Reserve had also once suppressed the U.S. dollar, supporting a stronger oil price.

However, Ben Bernanke, Chairman of the Federal Reserve stated on Thursday that the Fed would not launch a new round of quantitative easing monetary policy in the short term.

The statement disappointed the investors with a bearish outlook on the dollar market, and might lead to a rebound in the U.S. dollar to the previous level, which would cause further pressure on the international oil prices.

The international crude oil investors' concerns about the stalled talks between White House and Congress on U.S. debt and the possible breach of contract are expected to further contribute to inhibiting the rise in oil prices.

In addition, the prospects of the debt crisis in Europe remain uncertain, with countries such as Italy and Spain feared to follow Greece, Ireland and Portugal and become the next victims of the lingering crisis.

An EU Banking Authority (EBA) report according to which eight out of 90 European banks have failed a crucial stress test, and another 16 banks dropped in the danger zone.

And on Thursday, the EU leaders are scheduled to hold an extraordinary meeting to outline a new bailout package for debt-ridden Greece. However, it is doubted that the conference could roll out any concrete measures.

These above factors will not only continue to suppress the confidence in a future economy recovery in the U.S. and Europe, but also will to some extent support the U.S. dollar, and thus increasing the possibility of a future decline in international oil prices.

Source:Xinhua

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