Oil analysts see stability ahead for OPEC crude output and prices
When OPEC members meet next week, calm will prevail - unlike in March when ministers squabbled over export quotas and prices. For families and consumers in the Western world, good news and bad on oil prices:Skip to next paragraph
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The good - world oil prices are not about to go up again. They should stay at current levels for the rest of this year, and could begin inching down early next year.
The bad - they are unlikely to fall very far. Producers have learned their lesson, it seems, and will try to hold down production.
World demand stays low, meanwhile, and is unlikely to rise sharply despite increased economic growth in the United States.
These are the cautious views of a range of industry analysts and other sources contacted on the eve of an Organization of Petroleum Exporting Countries (OPEC) meeting in Helsinki July 18.
In marked contrast to the fast-moving events of January and February of this year, most analysts now see an element of stability in the oil market.
They don't see the prospect of a sudden collapse in prices, which would weaken heavily indebted producers even while it benefited recession-hit consumers.
At the same time, they don't anticipate a rise in prices while demand stays so low.
The Helsinki OPEC meeting is likely to take a sober ''wait and see'' attitude.
It will examine each member's record in holding production down and will prepare the ground for a likely meeting later this year to boost production quotas as winter demand slowly rises.
''In the last few years, OPEC meetings have talked about price, but now and for the next few years the emphasis will be on production,'' says David Johnson, of the Edinburgh-based analysts Wood, Mackenzie &Co.
Rotterdam oil trader Mike Roffey of the Anro Company says spot prices are holding firm at just above the $29-a-barrel marker price for Saudi Arabian light crude.
''It's what people think is going to happen that's important, more than what's actually going on right now,'' Mr. Roffey said.
''Driving the market today is the US, whose major oil company predictions for demand in the fourth quarter of this year are bullish.
''Demand in Europe is very low, but as long as the Americans keep buying, spot prices will be at or slightly above the official price.''
Analysts agree that OPEC itself has exerted a surprising amount of self-discipline since its historic London meeting in March, at which it lowered its marker price for the first time ever.
''OPEC has done better than anyone expected,'' says Tony Parisi, London bureau chief of the New York-based Petroleum Intelligence Weekly.
''It has managed to cut out discounting by Iran and other members, and it looks as though oil companies are no longer dipping into their stock barrels nearly as much as they were before.
''They are starting to buy instead.''
Mr. Parisi says OPEC, which appeared to be in disarray earlier this year as Iran, Libya, and other members sold at substantial discounts below the then marker price of $34 a barrel, has now gained a ''second wind.''
Why has it been so successful?
''It simply had to do it,'' Mr. Johnson says. ''There was no alternative.''
But OPEC also faces some difficult times ahead, analysts agree.