OPEC invests in oil production to safeguard supplies
The Organisation of Petroleum Exporting Countries (OPEC) has said that it will invest in oil production efficiency to secure global oil supplies.
The OPEC report, which was presented at the New York Mercantile Exchange (NYMEX) at the weekend, said that oil production, excluding Iraq, might increase from 31.7 million to 36.9 million barrels per day by 2010.
“Crude oil supplies rose by 4 million barrels per day since 2003 and investments in infrastructure could bring a net increase of more than 5 million barrels per day within 5 years,” the report said.
The report, which was made available to the News Agency of Nigeria (NAN) in New York today, said: “These developments suggest a move away from soaring energy prices on the global market as supply and demand remain in check.”
The report pointed to a decline in the value of the U.S. dollar and speculated that it was driving the market to “bullish territory”.
It said that bottlenecks in the refining sector had restricted access to vital resources amid rising demand. “Energy policies in world consumers, world economic growth and production developments in non-OPEC countries also influence market conditions,” OPEC said.
The report predicted that oil demand would not exceed 82 million barrels per day by 2030.
It would be recalled that OPEC President, Algerian Energy Minister, Chakib Khelil, had in June this year said that crude could hit a record 170 dollars this year owing to a weak U.S. currency and geo-political unrest.
“I predict probably prices of 150 to 170 dollars this summer,” Khelil was quoted as saying.
The OPEC president had attributed a weak dollar as the main cause of surging oil prices.
Meanwhile, Chinese shares have fallen to their lowest level for 19 months, rattled by fears about inflation.
Wholesale prices jumped 10 per cent in July from a year earlier, the highest rate in 12 years, official data showed.
The data sent the Shanghai Composite tumbling 5.2 per cent to close at 2,470 points, down 60% from last October’s peak.
Investors are concerned that rising inflation combined with the prospect of slower economic growth will hurt company profits.
However, China reported a rise in its trade surplus, which swelled to its highest level in eight months in July, despite the economic slowdown hitting many of its customers overseas.
The 10 per cent rise in China’s producer price index, which measures the price of goods as they leave the factory, was up sharply from June’s rate of 8.8 per cent.
The rise was primarily due to rising energy costs, with crude oil costing 41.2 per cent more than a year ago and a 32.6 per cent rise in the cost of petrol.
“Producers’ profit margins are being squeezed sharply and even though tough market competition will delay the pass-through to retail prices, it will happen eventually,” said Xing Zhiqiang, an economist at China International Corp.
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