Speculation strong factor in oil market conditions -- Kuwaiti oil official  

(MENAFN - Kuwait News Agency (KUNA))  Speculation plays a great role in determining the state of the international oil market and one manifestation of the issue was the hike of oil prices above the USD 80 per barrel (pb) mark in recent weeks, a Kuwaiti oil official told KUNA Monday.

Oil Undersecretary for Economic Affairs Nawal Al-Fzei said there is currently a balance above the USD 75 pb range with positive as well as negative factors at play.

Among factors pushing prices up is a sustained OPEC production cut and signs the global economy was inching its way out of recession.
Improving economy in industrial nations including the US and European states coupled with continued growth in China and India means increase in demand for oil and oil products, particular amid anticipation of a particularly cold winter ahead, she pointed out.

The official also remarked geo-political conditions in the Middle East, particularly relating to Iran's nuclear dossier and troubled conditions in Nigeria, also push prices higher, though to a lesser degree than before.
On the other hand, ambiguity as to the global economy in the near and medium future and whether big economies really passed the recession bring prices down.

The official listed some facts in this respect, including reports predicting the US economy is to drop from third to fourth quarter of 2009, high unemployment rates in industrial nations, and lower oil consumption rates. She also added that apart from China, industrial nations' economies fell short of the three percent growth rate of 2007.

Also weighing prices down, Al-Fzei told KUNA, was the increase in oil reserve in major consumer states which is currently around 60-days' worth of stock. Though this is below the early 2009 stockpile enough for 65 days' consumption, it is still much higher than the historical 52-53 days' reserves.
The undersecretary also pointed out that the Organization of Petroleum Exporting Countries (OPEC) which is due to convene December 22 in Angola is to decide between two options implied by two readings of the current state of affairs.

The first option is to keep on the production cap since world economies are showing signs of recovery amid limited non-OPEC supply.
The other option is to hike production to put a stop to the considerable hikes in prices.

The official was also asked whether an intended Gas producers and exporters' organization could affect OPEC. She said a direct effect is "unlikely", adding the new body could benefit from OPEC's experience and past trials to sustain its unity and stabilize and maintain supply