"Since the beginning of the year, crude oil prices have surged, with WTI rising from around $99/b to set an all time high ofmore than $126/b in early May. The depreciation of the US dollar has played an important role in the rise in prices, which along with the increased flow of new speculative investments in crude oil futures, has helped push prices further out of line with the levels justified by fundamentals.
The upward price trend has come despite a number of bearish developments. Forecasts for world oil demand growth this year by major institutions have been revised down sharply in recent months, OECD commercials stocks remain above the five-year average in both absolute terms and in days of forward cover, and US commercial crude stocks have risen to ninemonth highs. At the same time, OPEC continues to produce at around 32 mb/d and spare capacity has grown to now stand at more than 3 mb/d. The start-up of new projects, such as the 500,000-b/d Khursaniyah field in Saudi Arabia, should help to further ease market fundamentals...
The demand for OPEC crude in 2007 is estimated to average 32.0 mb/d, an increase of 280 tb/d over the previous year. In 2008, the demand for OPEC crude is expected to average 31.8 mb/d, or 120 tb/d lower than in the previous year."
Lloyd's MIU data shows that OPEC is actually shipping a bit over 31 million barrels a day.
Someone's got their data wrong!
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