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1/24/06

CGES: OPEC production cut 'no longer required' to keep oil over $50

London, Jan. 24, IRNA-The need for OPEC to make an output cut to support prices and prevent them falling below dlrs 50 per barrel (dpd) is no longer required, according to the Centre for Global Energies Studies (CGES).

The oil market has tightened over the past month, reducing pressure on OPEC for a production, which may now not arise until the second half of this year, the London-based analysts said in their latest monthly oil report.

It said that market fears for a further reduction was over the possibility of the situation in Nigeria worsening or the Middle East situation, it said in revising its upwards price forecast for crude in 2006.

In its reference case, CGES forecast that the average price of Britain's benchmark Dated Brent, would be 56.2 dpb this year, with rates gradually falling to an average of 51.9 dpb in the final quarter.

The center, founded by former Saudi oil minister Zaki Yamami, said that its revised prediction, up from last month's forecast of prices averaging 52.4 dpb this year, assumed continued tensions over Iran's nuclear program.

It expected Dated Brent prices in 2006 to average dlrs 59.9 dpb in the case of resolution of the stand-off regarding Iran's peaceful nuclear program.

But on the other hand, CGES conservatively forecast that rates would average 67.7 dpb if the Iranian situation got out of hand and resulted in sanctions being imposed.

Although OPEC has cut its production by more than 0.4 million barrels per day since last November, it believed that the organization will eventually come under pressure for cuts later this year to stabilize prices.

... Payvand News - 1/24/06 ... --



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