2004 - a year that saw crude oil pushed to previously unseen heights of $US56 a barrel, has, toward the end of the year seen a reversal of sentiment. The bulls that have turned bearish. This is despite efforts by the Organisation of Petroleum Exporting Countries (OPEC) to talk the market up again. One factor affecting the downtrend in oil prices is the delayed winter in America. Oil prices traditionally receive a boost during the northern hemisphere winter, when demand for heating oil soars.
The high oil prices witnessed this year defied all fundamentals and was really driven by speculators. It seems that once they have receeded, prices too will head back towards more sustainable levels. Experts feel that the end of the year will see oil prices at around the $US35 mark.
Global economic growth is also expected to slow in 2005 with a number of major economies raising interest rates. Even Chinese activity, may moderate as the authorities tighten up on credit and banks move to price risk more appropriately. On the supply side, OPEC is set to bring on new capacity and keep declining fields going longer as high prices offset rising costs.
15-Feb-05 
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