CGES sees little change in oil prices

A CONTRIBUTOR | JUNE 2011 | SOURCE: Zawya

The Centre for Global Energy Studies (CGES) sees little change in oil prices for the rest of the year after revising down its latest oil price forecast following this month's OPEC meeting.

The benchmark price of Dated Brent was expected average $118.9 per barrel in the third quarter of 2011, little change from the second quarter, before marginally increasing to an average of $130.8 in the final three months and falling back to $116 in the first quarter of next year, according to a copy of CGES's new monthly oil report obtained by IRNA.

CGES sees little change in oil prices

"OPEC's meeting on the 8th of June was a shambles, out of which the organisation itself may emerge as the biggest loser," the report said. "Political divisions and narrow self interest undermined any prospect of an agreement," it said.

In April, the London-based centre suggested that Dated Brent prices are most likely to exceed $130 per barrel (dpb) and even reach $140 before the end of the year.

The latest monthly world oil report said that oil prices could rise more steeply if the more hawkish members of OPEC persuade Saudi Arabia that increasing crude oil output significantly risks repeating the mistakes made in late 1997 it raised production as demand fell.

"In this scenario, the Organisation's output creeps up from its current level of 28.8 mbpd, so that it only reaches 29.2 mbpd by the end of this year" as opposed to 29.8 mbpd it forecast in its reference case and would result in the the North Sea benchmark rising to $140/bbl by the last quarter of 2011.

Prices it believed could tumble to an average of $100.2 by the fourth quarter and $93.8 in the first three months of next year if there was a more a much more severe impact on global oil demand growth of high oil prices.

This involved Saudi Arabia not increasing its output at the same rate as in the reference case and aggregate OPEC crude oil production initially rising to 29.6 mbpd in the third quarter before slipping back to 29.4 mbpd before the end of the year.

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