London, Aug 19, IRNA - The Center for Global Energy Studies (CGES) expects oil prices to continue to fall until early next year, albeit at a much more gradual rate that the recent plummet that saw more than a 30 dollars per barrel (dpb) drop in only three weeks.
In its latest monthly oil report, London-based center forecast in its reference case that Dated Brent would drop from an average of 124.6 dpb in the third quarter of this year to 116.1 dpb in the final three months and down to 105.9 dpb in the first quarter 2009.
The most likely scenario, it said, continues to be based on slower global demand growth amid economic uncertainty allied to only limited growth in supply.
The forecast was that OPEC would only act to defend a price floor of somewhere around 100 dpb and would need to start cutting production at the beginning of 2009 as world oil sticks build up.
The expectations was of a reduction of output by 300,000 barrels per day (bpd) in the first quarter and by a further 500,000 bpd in the second quarter, bringing the average price of Dated Brent back up to 114.8 dpb.
Such a scenario suggested that the benchmark average for 2009 of 111.4 dpb would be little different from the average forecast for the whole of this year of 115 dpb.
CGES believed that the dramatic fall in the price of oil over the last month from a record of 147 dpb was due to a change in mood about the uncertain outlook for global economic growth.
"As the market's assessment of the global economic situation darkened, so too did its expectations regarding global oil demand growth and with them the price of oil," it said.
"While economics determines the future of oil demand, it is politics that looks likely to determine what happens to supply," its report said, referring to the conflict in Georgia and the recent attack on a major pipeline in Turkey.
... Payvand News - 08/19/08 ... --