Demand for Oil Reviewed by OPEC

The OPEC has revised its earlier forecast on demands and consumption of oil. The revised report says that the demand would definitely be lower than expected and is accounted to the slow growths in economies and the further weakening of the economy in the US. The oil industry has been facing serious uncertainties due to the slow moving global economy and the fear of US recession. The slow moving economy has drastically affected every major industry, not just oil.

The soaring oil prices are also attributed the volatility in the equity markets. Most investors and economists are constantly harped by the fear of an approaching recession. The market demand seems to be uncertain in the next year too owing to large cut offs in oil supply from Libya. This has as well propelled US based Brent Crude contracts of Futures. The investors also fear the decision of the Standard and Poor to bring the levels of debt in US as well as Europe down.

The OPEC members have decided not to increase production of oil to combat rising prices. There seems to be no further requirement to release surplus oil stocks to lower the prices of oil. Though there has been a supply of as good as 60 million barrels of oil in the world markets from the members of the Paris based IEA. This has checked the price rise considerably and has also alarmed speculators of oil prices worldwide. Contrary to the OPEC’s decision to further oil production, Kuwait and Saudi Arabia have increased oil production significantly. The OPEC decision came in June 2011 in the Vienna meet.

Despite several revisions and decisions, this 37^th week of the year has once again witnessed an oil price rise, owing to an apprehended turbulent market condition in days to come.

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