January 30 saw the ministerial meeting of the OPEC countries held in Vienna, discussing on the supply and demand at the international oil market and the crude oil production by the OPEC countries in the 2nd quarter of the year.

Prior to the meeting some OPEC members expressed, since the oil price remains on the higher side, so temporarily there was no need to cut down production. This piece of good news has helped bring the 3 months' future of light oil price down 3.3 percent to 47.18 US dollars per barrel in the New York Commodity Exchange on 28 January. In December 2004, the OPEC made a decision at the Cairo meeting that starting from January 1, the oil production would have to reduce million barrels every day. This has roused the panic in the market with the oil price to pop up to 50 US dollars per barrel once again recently.

The international community still retains a fresh memory of the oil price hike last year with the annual oil price to shoot up 30.4 percent and the average price to USD 38.21 per barrel, a record high ever since 1985.

The oil demands increased rapidly and manipulated by the floating capital the panic happened in the market with geo-marginal politics unstable. These are the major reasons causing the continuous hike of the oil price in recent years. The tendency of the oil price still remains the focal concern of the international opinions this year and also the biggest hidden worries for the world economy.

According to the forecast of the World Bank, this year will see the oil price drop to 36 US dollars per barrel while the estimation by Morgan Stanley and Goldman indicates respectively 34 and 35 US dollars per barrel and the International Monetary Fund is of opinion that it is going to remain the same as last year, being 37.25 US dollars per barrel. An integrated analysis says, the oil price is expected to come down from a high price, but there is no possibility for the low oil price of 20 US dollars per barrel to happen recently as ever happened in 1990s.

Though there is not much oil yield capability remained in the world, especially the remaining output capability of the OPEC countries went down from 3-4 million barrels per day 10 years ago to the 1-2 million barrels per day at present yet the global supply of oil remains basically sufficient and there is no substantial change in the demand and supply matrix with the supply to see a little bit over the demand. The oil resources are not recoverable but there hasn't seen any shortage of it in the global reserve. According to the statistics of the British Oil Company, towards the end of 2003 the global oil reserve made clear accounted for 1.1477 trillion barrels with the ratio of the reserve/extraction to last for 41 years. However, this is the conventional oil resource yet the unconventional oil reserve exceeds by far over the conventional oil reserve. Containing in the oil shale in Venezuela and Canada are a reserve of 350 million barrels and the daily progress of science and technology will make people able to exploit the unconventional oil as they do the conventional one, let alone many countries are now engaged in a speedy development of hydrogen energy, solar and wind energy and other new energy resources and so there won't be any oil crisis in the whole world.

Actually, the world oil cost including prospecting and exploiting is very low. The oil output cost of the OPEC countries is only 6 US dollars per barrel and the global average is less than 15 US dollars per barrel, and even if 100 years later the cost for oil extraction won't exceed 30 US dollars per barrel. But who's playing high the oil price? The market speculation and manipulation is the chief culprit. Last year, the oil market, stock market and foreign exchange market all became the "gambling house" of the speculative capitals. The market speculation has become the main force dominating the oil price trend at present. For the moment, the global offset funds counted for some 7000 items in number with a total capital of around 900 billion US dollars, witnessing an increase rate of 10 percent and so the flow affects directly the oil price tendency. According to the statistics of the US commodity future trading committee the trading volume of the offset funds now counted for some 60 percent strong in the oil exchange market with the general position of the future crude oil to reach 32.9 percent at the highest and the lowest being 24.5 percent. However, the US "oil experts" harangued among the public that the oil price will go up to 60-70 US dollars per barrel, pushing the water ahead and the waves to go high.

The world economic trend, the fluctuation of the US dollar exchange rate, the geo-marginal politics and the stable political situation in the oil producing countries are all factors affecting the international oil price trend this year. However, the oil supply and demand will as a whole remain on a balance, thus making the oil price to drop to its normal price standard.

By People's Daily Online