Weekly average oil price falls 4.37%: OPEC

14:16, May 10, 2011      

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The weekly average oil prices of the Organization of Petroleum Exporting Countries (OPEC) dropped significantly last week, down 4.37 percent to 114.56 U.S. dollars per barrel, the Vienna-based cartel said on Monday.

Driven by market speculation and weak U.S. dollar, the OPEC oil price had been rising since July 2008, reaching a new record high in the first week of this month.

However, the OPEC oil price slumped drastically from 119.90 on Monday to 104.40 dollars a barrel on Friday, or nearly 13 percent during the five trading days last week.

The world oil price also fell significantly last week, due to various factors.

When Osama bin Laden was killed early last week, the international oil price crashed down immediately. Analysts attributed it to the expectation that the threat of terrorism on crude oil supplies in the world oil market would be reduced.

Moreover, as Gaddafi's son was killed, the civil war in Libya is expected to end soon, and the crude oil supply there will soon return to normal, which becomes another stimulus to a decline in oil price.

Furthermore, it is also worried that the current high price of gasoline in the U.S. consumer market would block the recovery of gasoline demand.

Figures released by the U.S. Labor Department on Friday also showed that in April this year, the U.S. unemployment rate rose to 9.0 percent, the first rise since November 2010 and above the previous expectation of 8.8 percent.

It indicated that the U.S. economic recovery is still very difficult, thus causing some investors to flee commodities markets because of concerns about slowing global economic growth.

The sharp rebound in the U.S. dollar during this period also plays an important role in the suppression of oil prices. The dollar index closed at 74.886 on last Friday, increasing 1.953 points over the previous week, or 2.6 percent. A stronger dollar causes a decline in dollar-denominated crude oil prices.

However, analysts believe that, for the near future, the international oil prices would remain very variable. The uncertainty of the U.S. economic outlook will affect dollar's exchange rate.

In addition, the death of Bin Laden does not mean the threat of terrorism would disappear. On the other hand, the incident may anger some militants and make the situation of the international anti-terrorism even more complicated.

Analysts from German Commerzbank believed that the high oil price is due to market speculation that takes advantage of concerns about the risk rather than market shortage. Therefore, as long as the situation in some Arab countries remains volatile, there will not be any drop in international oil price in a real sense.

Source: Xinhua
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