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Chinese experts Monday predicted that world's crude oil futures will hit a new high in that the demand still outpaces capability of producers and refiner alike in the second half of the year.
Crude oil futures hit a record high on Monday in the New York Mercantile Exchange (Nymex), reaching 59.23 US dollars a barrel in Asian trading for the July contract.
It is a rise of 76 cents from Friday's close, the second straight day setting oil intraday records since it hit 58.60 US dollars a barrel on Friday.
"The tension between oil demand and supply remains the basic reason for this soaring turn," said Shan Weiguo, director of petroleum economic and technological research center of China National Petroleum Corporation (CNPC), China's biggest oil producer.
Having dropped below 47 US dollars per barrel in the middle of May since making the record high close in April 1 at 57.27 US dollars per barrel, the Nymex oil futures rise again since the US entered the peak season of gasoline consumption.
The decision made by Organization of Petroleum Exporting Countries' (OPEC) to raise its daily output quota by 500 thousand barrels to 28 million barrels a day last Wednesday failed to soothe the anxiety of the market.
"It is because OPEC members had already been unofficially exceeding that level," said Shan.
According to Shan, the market throws a higher expectation for oil demands in the near future.
Monthly report released by the OPEC said that global crude oil demand will reach 85.91 million barrels a day in the fourth quarter of this year, 100 thousand barrels more than the figure released last month. "It is far beyond the current production capability," said Shan.
"A higher prediction for gasoline and diesel demands and a low expectation for oil refining ability further intensified the fears in the market," he said.
Upon the intensified tension between oil demands and supply, the kidnapping event of oil workers in Nigeria, the biggest African oil producer, and the possible strike of oil workers in Norway, the world's third largest exporter, further fueled the price hike, Shan said.
Amidst soaring momentum of oil futures, Xie Guozhong, an economist with Morgan Stanley Asia, published an article last Thursday, drawing a pessimist picture that the international crude oil market may fall into a bear market soon with the slowing of the global economy and the weakening trend for crude oil demand.
Niu Li, an economist with the Economist Forecasting Department of State Information Center, said that Xie's assumption, as well as the prediction made by Goldman Saches, a Wall Street famous investment bank, early this year that oil prices may leapfrog to 105 US dollars per barrel in 2007, can only occur "under extreme circumstances."
According to him, although the crude oil futures may break the benchmark of 60 US dollars a barrel in this round of price hike, the momentum was not strong enough to sustain the continuous uphill turn owing to the slowing growth pace of the global economy.
This year, both the EU and Japan did not scored their economic growth as rapid as early prediction. As for China, with the slowdown of the CPI and the investment, the economy has seen a relatively stable growth, Niu said. In the first five months, China's crude oil import dropped by 1.2 percent over the same period of last year, a phenomenon of cooling economic development.
Shan, however, held a wait-and-see attitude towards the oil demand. "It takes time to see whether the demand will be slowed down," he said.
Shan also presented another option. Sluggish stock market may "squeeze more capital from stock bourses to the oil market", leading to sharp fluctuation of oil prices, he said.
The fundamental reason for oil price soaring is the sharp rise of demands, he said. "Only through adjusting the oil demand can the situation be changed," said Shan.
(Xinhua News Agency June 21, 2005)
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