(MENAFN- Arab Times) Regardless of the outcome of OPEC's meeting last Friday, oil prices will neither surpass the $70 level nor dramatically drop, provided they are not lesser than what it is now or below $50 per barrel.
However, the reality is that the oil market is saturated with oil as every producer is extracting maximum from the ground. This is the reason why the oil prices fall and it will remain so for a while unless the demand for oil picks up so steeply that the entire surplus in the market will be used up.
Here is where spare capacity will play a role, and determine whether OPEC or the world has any oil left as spare capacity to meet the international oil demand. This is a concern of the future, as none of the OPEC members are currently thinking about investing or building more oil reserves for the future.
It is a concerning matter that no one seems to be in the mood to invest without expecting any immediate return for the investments, and are leaving the matter to other producers due to the weak oil prices. This time, none of the OPEC members are willing to risk more money unless they are certain there will be sufficient demand, especially since the reduced oil prices did not harm the non-OPEC producers as it seems they managed accordingly, cut down additional costs and advanced with latest technology and their heads above the water.
The current marketing method of OPEC seems to be working, as it managed to bring the oil prices to over $60 per barrel without reducing the quantity of oil going into the market; rather it increased the oil supply. Had it not been for the emergence of shale oil, the oil prices would have stayed strong at $100 per barrel.
This magical number is still attainable but not now, as it is based on the supply-and-demand rate in the market. In order for this mechanism to work, we have to wait for few more years, or earlier if the world demand for oil increases to such an extent that none of the oil producers will have sufficient spare oil capacity to meet that demand.
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