Algiers (Platts)--10Jan2008
OPEC president Chakib Khelil said late Wednesday that OPEC was watching
carefully the fallout form the US subprime mortgage crisis and feared that an
economic downturn could hit oil demand, the Algerian news agency APS reported.
"A global economic downturn will lead to a fall in demand for oil and
influence oil prices," Khelil was quoted as saying in the Algerian city of
Oran.
"We are following with interest the evolution of this crisis, which
could, if it spread to Europe and the rest of the world and slow down the
world's economic development," Khelil said, referring to last year's collapse
of the US high-risk housing loans market that has affected financial markets
elsewhere.
Khelil, who is Algeria's oil minister, added that "a global economic
downturn will lead to a fall in demand for petroleum and influence the price
of crude oil."
He also said he expects oil prices to remain strong during the first
quarter before falling during the second quarter, although remaining within
current high levels despite the fact that markets are well supplied.
"Oil prices will start to fall starting in the spring but they will
remain at elevated levels," said Khelil, reiterating remarks he made last week
after oil futures prices briefly surpassed $100/barrel.
But he added that this would not be due to supply and demand fundamentals
but to factors outside of OPEC's control, which he said can do no more than
guarantee that markets are well supplied.
"There is no imbalance between supply and demand for petroleum products
on the global market that can justify such a rise in oil prices," he said.
OPEC's role, he said, is limited to supplying markets with sufficient
quantities of crude oil. Other issues that should be taken into account are
the economic crisis in the US and its repercussions on investment funds and
their orientation, as well as the role played by speculators.
The large funds which have poured their investments into the oil markets
could withdraw at any time and upset the market, Khelil said.
Oil prices have fallen back since trading above the psychological $100/b
level. The front-month US light sweet crude oil futures contract was trading
below $96/b on London's Intercontinental Exchange on Thursday morning.
OPEC is due to meet again in Vienna on February to review its output
policy.
The cartel's ministers last met on December 5 in the UAE capital Abu
Dhabi, when they agreed to leave official output limits unchanged at a
collective 27.253 million b/d for the 10 members already bound by production
agreements.
--Staff reports, newsdesk@platts.com
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