OPEC weekly oil price hits new high again

08:34, May 03, 2011      

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After a slight drop over the previous week, the weekly average price of the Organization of Petroleum Exporting Countries (OPEC) rebounded again and reached a new record high of 119.79 U.S. dollars per barrel last week, showing the highest level since the last week of July 2008, the Vienna-based cartel said Monday.

Due to the recent weakness of the U.S. dollar and the effect of market speculation, OPEC oil price had once continuously increased and reached new records for four consecutive weeks since the September 2008.

However, the rating agency "Standard & Poor's" lowered the rate of the long-term outlook of the U.S. government debt on April 18, which means a control of the U.S. government on its huge budget deficit is challenged.

Additionally, as it is worried that a consecutive high oil price may suppress the consumption growth and the crude oil dealers also make quick profit-taking business, OPEC oil price reduced from 118.06 dollars per barrel in the second week of April to 117.70 in the third week.

However, OPEC oil price increased again last week and even rose above 120 dollars since Thursday, reaching 120.91 dollars a barrel, which represented the highest level of OPEC daily oil price since Aug. 1, 2008.

The analysts generally believe that a rise in oil price was mainly due to the weak U.S. dollar. Ben Bernanke, chairman of the U.S. Federal Reserve announced on April 27 that the ultra-easy monetary policy will be unchanged for "a quite long time," which caused the lowest level of the dollar during the passing three years.

In recent weeks, the U.S. ultra-easy monetary policy caused a continual depreciation in the U.S. dollar, while an extremely low interest rate of the dollar also made it less attractive to the investors.

The weak U.S. dollar has become an important factor for a significant improvement in the commodity prices including crude oil and precious metals like gold.

In addition, the international oil market was still influenced by the concerns on the situations in Libya and other Arab countries. The crude oil price was also supported by the investors' worries on a possible shortage of oil supply.

The German Commerzbank said that, at present, the supply of world crude oil is adequate, and Saudi Arabia alone has a daily idle capacity of 4 million barrels.

Therefore, the situation in the Middle East, the trend of the U.S. dollar, as well as the outlook of the U.S. economy in the future will be important factors impacting the trend of international oil price.

The analysis pointed out that particularly the situation in the Middle East for the short term would be difficult to be stable, and the current U.S. monetary policy will also keep the dollar weak, coupled with the weak housing market, high unemployment rate, high oil price affecting on consumption and slump in loans, which forms "a terrible combination" to suppress the recent U.S. economic recovery.

All the above factors are likely to make the international oil prices maintain at a high level with fluctuations in the near future.

Source: Xinhua
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