OPEC should not cut output unless it wants prices up again: CGES

London (Platts)--22Nov2004

The fall in oil prices since mid-October does not mean the beginning of a
price slide, and OPEC should not cut output unless it wants to push prices
back up again, the Center for Global Energy Studies said Monday. Nevertheless,
it said, fears that high prices would lead to a slowdown in world economic
growth were starting to be borne out and the path of oil prices in 2005 would
depend on the extent of this slowdown and the severity of winter weather. "Oil
prices have begun to retreat from the record levels reached in October, with
Dated Brent easing by nearly $12/bbl to a little over $40/bbl by mid-November
and the heavier, sourer OPEC basket falling by $11/bbl to $35.50/bbl," the
Center said. "However, the CGES does not believe that this downward move in
prompt oil prices signals the start of a price collapse," it said, explaining
that while high levels of oil imports and lower refinery runs in the US had
allowed crude oil stocks to be built up in recent weeks, crude stock cover was
still low and inventories of key products remained below normal levels.

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