Oil prices could rise to $40 dollars a barrel in New York by the end of this year, analysts said on Wednesday, as price levels remained around 10-year-high levels here.
The chief economist at the Centre for Global Energy Studies Leo Drollas said prices could rise to $40 a barrel in New York and $35 in London by the end of this year -- but only if the Organisation of Petroleum Exporting Countries (OPEC) did not agree an output increase at its ministerial conference in Vienna on September 10.
He also stressed that such price rises would be occasional spikes, not average levels. Moreover, Drollas predicted that OPEC would agree to pump at least 500,000 extra barrels a day. The producers' organization has already increased production twice this year in an attempt to stabilise prices which have tripled since late in 1998.
The head of commodities risk management at the Royal Bank of Scotland, Andrew Hartree, said he "wouldn't bet against" Brent prices rising to $35 a barrel over the next few months.
An analyst at Salomon Smith Barney, Peter Gignoux, said that "nothing would surprise him now", and he added that the average price of Brent last year was $18.03 a barrel and that the average for this year so far was $27.25.
In early afternoon trading, Brent crude oil for September delivery was being traded in London at $32.30 a barrel, 12 cents higher than Tuesday's close.
In New York on Tuesday, light sweet crude for September delivery ended the session at 31.67 dollars a barrel, 27 cents lower, after also climbing to more than $32 earlier. In London on Tuesday crude prices reached a session high of $32.80 a barrel, the highest level since November 1990 when the price rose to $32.45 a barrel following the invasion of Kuwait by Iraq.
On October 10, 1990, Brent had risen to $40.95 a barrel.
Analysts said the London prices were exaggerated ahead of the close of the September contract at the close of trade Wednesday. The latest price surges began ahead of the publication of data on US stock levels that were expected to show a continued decline.
In the event the shortfall was less serious than expected, but analysts say there is still an overall shortage of crude and, notably a shortage of distillate fuel stocks, including heating oil, which is particularly serious before the winter months.
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com )