Crude prices may stabilise in second half of year: Experts

June 22nd, 2008 - 6:54 pm ICT by IANS  

Seoul, June 22 (IANS) A drop in demand for crude and increased production are expected to stabilize oil prices in the second half of the year, WAM reported Sunday quoting a South Korean think tank. The price of benchmark Dubai crude, which makes up the bulk of South Korea’s oil imports, could reach $107 per barrel from July through December, the Korea Energy Economic Institute (KEEI) said.

It said the average price of crude for 2008 could hover at around $105.

The figure is a sharp increase from an average $68.43 per barrel for all of last year, but lower than the $126.29 reported for the first 20 days of this month.

The KEEI said it based its outlook on the likelihood that the world economy may experience a slowdown in the coming months, caused in part by weaker US economic growth and cutbacks in fuel subsidies among many southeast Asian countries.

It also said new oil fields that will start full-scale commercial production in the United States, Sudan and Brazil should increase daily output by around one million barrels.

In addition, it said, a stabilization of the US dollar exchange rate could help in keeping crude oil prices down.

Experts have claimed the weakness of the greenback contributed to higher crude prices because oil exporters tended to raise prices to make up for a drop in the buying power of the dollar.

The energy research institute, however, cautioned that unforeseen developments like political unrest in the Middle East and other oil-producing regions along with natural disasters could hike prices.

It said in the worst scenario, average prices for the second half may hit $140 per barrel with the price for the entire year averaging $121.

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