OPEC weekly oil price rebounds to new high

08:42, March 29, 2011      

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Riding the prospect of growing oil demand due to continued instability in the Middle East and the gloomy nuclear crisis in Japan, the weekly average oil price of the Organization of Petroleum Exporting Countries (OPEC) rebounded last week to a new high in two and a half years.

The OPEC basket oil price reached 110.63 U.S. dollars a barrel in the past week, hitting a new record since the second week of August 2008, the Vienna-based cartel said Monday.

Throughout the past week, OPEC oil prices hovered above 110 dollars a barrel, fluctuating within a narrow range.

The unrest in the Middle East and North Africa and the disasters in Japan were considered as the main driving forces behind the rise in oil prices last week. The situation would not change for a period of time in the future.

Last week, the West-led military attacks on Libya led to further concerns about the security of oil supply in this important oil-producing region.

Although Libya's crude oil output represents only a small share both in OPEC oil output and in world oil consumption, it was worried that the turmoil in Libya would spill over to other oil-producing countries in the region.

Meanwhile, as Japan's nuclear crisis escalated, it was expected that some other countries would have their nuclear power plants shut down, which would lead to an increasing demand for crude oil for fuel power generation.

The increase in this aspect was expected to be significantly larger than the decline in demand caused by Japan's temporarily depressed economic activities in the wake of the catastrophic earthquake and tsunami on March 11.

Amid the crises in Libya and Japan, speculation on the international crude oil market has increased significantly, prompting some analysts to believe that a crude oil bubble was taking shape and that the market was becoming more sensitive and uncertain.

Accordingly, many investors on the international crude oil market would opt for short-term operations for quick profit-making. As a result, it was feared that commodity prices, including crude oil prices, would undergo considerable fluctuations.

Source: Xinhua
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