Where Are Oil Prices Headed?by Tim Manni
After oil prices retreated drastically from their historic highs last July, certain members of the Organization of the Petroleum Exporting Countries (OPEC) are modifying their “fair” price expectations in accordance to the global recession:
[Qatar's oil minister Abdullah bin Hamad] Al-Attiyah, whose country is one of the 12 members of the Organization of the Petroleum Exporting Countries, said he was “trying to be more pragmatic” about prices and that $50 is and “OK price for 2009″ given the current economic climate.
The currently-weak economic climate brought oil prices down more than seven percent this afternoon to $48.41 a barrel, from $52.38 on Friday:
Weakness in the global economy continued to be one of the underlying factors pressuring oil prices.
Leaders of the Group of 20 developed and developing nations meet April 2, with OPEC hoping it will agree measures to shore up the global economy and bolster oil demand.
Instead of announcing a new round of production cuts in their March meeting, OPEC decided “to focus on greater compliance with an earlier 4.2 million barrel round of cuts from September levels.” Last week the New York Times said the days of production cuts may soon be over:
Analysts believe OPEC could boost production later this year, but only if prices rise above $70 or $75 a barrel, a level deemed appropriate by OPEC states whose national budgets depend on fossil fuel exports. NYMEX traders sense crude prices returning to $60 a barrel in short order, notwithstanding the possibility of wild swings as the market responds to overall economic trends.
Record-setting gas prices last summer sent consumer demand in a free fall. Back in September we told readers how they were in charge of their gas-price destiny. Controlling consumer demand is a sure-fire way from keeping gas prices from escalating too high — think of this as a reminder.