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OPEC production registered a healthy rise in August. But surging seasonal demand within OPEC blunted the impact of buoyant output levels on exports. And prices continued to rise, seemingly oblivious to what was the second highest monthly OPEC production since October 2008.
OPEC Basket prices have been above $105/B since 6 August. The market’s late June flirtation with sub-$90/B levels appears firmly behind it, as do fears that a euro-zone collapse could hit oil demand. “It is this business of sentiment,” explains Leo Drollas, Chief Economist at the Center For Global Energy Studies (CGES). “It is this expectation that demand will pick up on the back of the US economic stimulus plan everyone is waiting for. Plus there is dollar weakness and the Iran situation rumbling. That is what is explaining these prices,” he continues.
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