Oil prices stable around US$62 as all eyes turn to OPEC

06-Dec-06

Oil prices on Tuesday steadied around US$62 as forecasts called for mild U.S. weather next week against anticipated further production cuts by OPEC. Light sweet crude for January delivery settled at US$62.43 a barrel on the New York Mercantile Exchange. In London, January Brent on the ICE Futures exchange slipped to US$63.32 a barrel. On Tuesday, the U.S. Energy Department released its annual long-term world energy forecast, predicting that oil price, when adjusted for inflation, would decline between 2007 and 2015 as investments made in recent years of historically high prices bring new supplies to the market. The Energy Department expects prices to resume an upward trend, bringing average real prices (in 2005 dollars) by 2030 to more than US$59 a barrel. In nominal terms, that would be equivalent to about US$95 a barrel, as it expects OPEC to adjust its output over the next 25 years to try to keep average prices between US$50 and 60 - a range it is already trying to achieve. In the very short-term, analysts expect the oil market to strengthen further as demand increases during the Northern Hemisphere winter, with US$60 a barrel to become the new price floor.