OPEC weekly oil price rebounds slightly

12:59, October 05, 2010      

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The weekly average prices of the Organization of Petroleum Exporting Countries (OPEC) rebounded slightly last week, increasing by 1.67 U.S. dollars to 76.53 dollars per barrel, the Vienna-based cartel said Monday.

However, it is generally believed that, instead of the changes in the relationship of oil supply and demand, the rapid decline in the U.S. dollars as well as the positive prospect on the growth of oil demand are the major factors driving the price upwards.

Last week, the exchange rate of euro against dollar hit a new record high over the last 6 months, rising to 1.3772 per euro. The weak dollar makes dollar-denominated crude oil cheaper for overseas buyers.

Matt Zeman, chief market analyst of the U.S. LaSalle Futures, believed as the international commodity prices including crude oil are denominated in U.S. dollars, the exchange rate of U.S. dollars would continue to be the major factor affecting the movement of international oil prices in the next period of time without influence from other international events.

He also said that, if the U.S. dollars continue its trend of weakness, the crude oil prices would also keep increasing in future.

However, the U.S. economic situation still impacts the market greatly. The recent economic figures of the U.S. showed that its economic activity in the third quarter remains relatively stagnant.

The U.S. Institute for Supply Management (ISM) announced on Oct. 1, the U.S.'s manufacturing index in September of this year was 54.4, which is not only lower than August of 56.3, but also 0.1 percent lower than previously forecast.

However, a survey released by the Thomson Reuters/University of Michigan on the same day showed that the U.S.'s consumer confidence index in September reached 68.2, more than the 67.0 that had estimated by analysts.

Some analysts believe that, it makes possible for the Federal Reserve (FED) to adopt a new loose policy, which may enhance the prospect on oil demand growth in the market.

Moreover, along with the arrival of the heating season in winter of Northern Hemisphere, heating oil prices are increasing: the prices of heating oil futures in November of the New York Mercantile Exchange (NYMEX) have been rising by 1.2 percent over the past four days.

Source: Xinhua


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