OPEC weekly oil price reaches new record high

09:16, December 14, 2010      

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The weekly average prices of the Organization of Petroleum Exporting Countries (OPEC) last week once again reached a new record high of 87.80 U.S. dollars per barrel, the Vienna-based cartel said Monday.

It represented the highest level of OPEC weekly average crude oil price since the first week of October 2008.

OPEC oil prices last week fluctuated at a high level within a small range of less than 0.67 dollars from 87.46 to 88.13 dollars.

Impacted by the expectations of an increasing interest rate in China and an increasing U.S. dollar exchange rate, although the international oil prices remained high, it lacked strong drive for a consecutive rise. This also reflected the hesitation of the international oil market.

On Friday, China's central bank raised bank reserve ratio, which was seen as a more moderate austerity measure compared to a rise in interest rates.

However, the concerns remain that China will raise its interest rate, which would then cause an inhibition on the growth of its domestic economy and consumption, thereby affecting the demand for crude oil.

On the other hand, the U.S. indexes of consumer confidence and trade showed relatively good, suggesting an improvement in the U.S. economy. Affected by this, last week the dollar index has increased over the previous week to 80.07 points.

Due to a series of positive economic figures including the U.S. consumer confidence index, an optimistic prospect on the U.S. economic recovery is strengthening.

In addition, the International Energy Agency (IEA) and OPEC have increased the world oil demand estimation this year by 130, 000 barrels per day and 150,000 barrels per day respectively in their latest reports.

Combined with the arrival of winter in northern hemisphere, these are the factors to support oil prices.

However, analysts also noted that oil prices would encounter stronger resistance after it approaches 90 dollars per barrel.

Additionally, as the economy recovery in Western industrialized countries remains slow, the economic development situation of emerging economies, especially China, will increasingly affect the international oil prices. China's inflation and its austerity policies have an expanding impact on the world oil market.

Therefore, in the short term, the international oil prices are likely to remain fluctuated at a high level without a big improvement.

Source:Xinhua
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