Crude prices forecast at $35-45/b regardless of OPEC: Cosmo Oil

Tokyo (Platts)--12Mar2009

Benchmark light sweet crude futures on the New York Mercantile Exchange
are forecast to hover around $35-45/barrel until around September, regardless
of any decision to be made at OPEC's upcoming meeting on March 15 in Vienna,
Hirohiko Kato, general manager of the international business department at
Japanese refiner Cosmo Oil said Thursday.
"Crude oil prices are forecast to hover around $35-45/b throughout the
first, second and third quarter of this year, with possibilities that prices
are going up from this level, depending on the economic situation," Kato said
at a briefing hosted by the Petroleum Association of Japan in Tokyo. 
"It is unlikely to see crude oil prices going beyond $50/b and reaching
$70/b even if OPEC decides to cut another 1 million b/d at the next meeting,"
Kato said.
Looking at the prospect of the March 15 meeting, Kato, however,
questioned whether OPEC will agree on a further supply cut, while there
is room for increasing compliance with an agreed 4.2 million b/d output
deduction amid divided opinions among OPEC producers.
"I understand OPEC's compliance with the agreed output cut is at the
highest-ever level on average. However, there is still room for improvement
among suppliers such as Venezuela and Iran," Kato said.
"Therefore, I think OPEC producers would most likely confirm their
compliance with the agreed output cut at the next meeting," he said. "Even if
they decide on an additional supply cut of 1 million b/d, I think the decision
would have limited upward price pressure amid the economic slowdown," he
added.

JOGMEC ECONOMIST'S VIEW
Meanwhile, Takayuki Nogami, a senior economist at Japan Oil, Gas and
Metals National Corporation, told Platts earlier this week that benchmark
crude oil prices will hover around $40-55/b until the end of June as OPEC is
expected to decide on a further supply cut at the March 15 meeting.
"We are likely to see benchmark oil prices of around $40-55/b until the
end of June," Nogami said. "I understand that OPEC producers have divided
opinions on whether to decide on further cuts at their next meeting. However,
OPEC will likely decide to cut its supply by another 500,000 b/d or 1 million
b/d as the market may take their decision to maintain the current supply level
as a bearish factor." 
"Of course, OPEC may maintain its current supply levels, whilst urging
its member countries to increase their compliance with an agreed [4.2 million
b/d] output deduction," Nogami said. 
"However, I think OPEC would be inclined to decide on additional cuts
with a chance of 70:30 over maintaining the current levels," he added.
OPEC secretary general Abdalla el-Badri said Monday the group's
compliance with a 4.2 million b/d output reduction agreed in Algeria on
December 17 was at 85%. 
--Takeo Kumagai, takeo_kumagai@platts.com