Oil prices retreat, but hold above US$63

18-Dec-06

Oil prices rose steadily all of last week on renewed supply concerns as U.S. inventories fell and OPEC decided to cut output by half a million bpd in February. However, oil prices retreated from highs last week, but stayed above US$63 a barrel in early Monday trading, in an apparent adjustment to the recent price rises. By delaying an output cut until 2007, OPEC has left itself a window to decide against a cut, should demand spike higher due to a colder-than-expected winter or stronger-than-expected economy. Global crude oil inventories are still abundant, but any potential decline in supplies seems to be a reason to bid up prices, especially against the backdrop of resilient consumer demand.