OIL PRICE: Brent breaks USD94 barrier and Kuwait thinks world can handle UISD100/barrel

MARKET METRICS   Tue., Dec. 28, 2010
Crude Oil	Opec Basket	90.67	-0.06
($/bbl)	ICE Brent	94.38	+0.53
	Nymex Lt Swt	91.49	+0.49
Products	Nymex (¢/gal)
	Gasoline	240.56	-1.53
	Heating Oil	252.43	+0.77
	ICE ($/ton)
	Gas Oil	780.25	+2.75
Natural Gas	New York	8.03	-5.47
Spot Prices	Henry, LA	4.11	+0.05
($/MMBtu)	Katy, Texas	4.03	+0.02
	AECO, Canada	3.54	+0.08

Reuter quoted Mr Shaikh Ahmad Al Abdullah Al Sabah oil minister of Kuwait as saying that the global economy can withstand an oil price of USD 100 a barrel as other exporters indicated OPEC may decide against increasing output through 2011 as the market was well supplied.

Analysts have said oil producing countries are likely to raise output after crude rallied more than 30% from a low in May because they fear prices could damage economic growth in fuel importing countries.

Mr Ali Al Naimi oil minister of Saudi Arabia said that he was still happy with an oil price of USD 70 to USD 80 a barrel and there was no need for an extra OPEC meeting before the next scheduled one in June. Others in the group have been pressing for a higher price, arguing that quantitative easing and a weakened US dollar that spurred gains across financial markets mean the oil price strength is partly nominal.

Mr Sameh Fahmy oil minister of Egypt said that the current increase in oil prices was the result of higher demand on heating fuel because of the cold weather in Europe.

Mr Mohammed bin Dha’en Al Hamili energy minister of UAE said that crude oil inventories are quite high. It's the highest over the five years average. The market is well supplied.

European benchmark ICE Brent crude for February closed at USD 93.46 after hitting USD 94.74 a barrel, its highest level since October 2008.

Arab oil exporters meeting in Cairo this weekend said they saw no need to supply more crude as stocks were high and prices had been inflated temporarily by cold weather in Europe.

Asked by Reuters if the world economy could stand a USD 100 oil price, Mr Shaikh Ahmad Al Abdullah Al Sabah said that "Yes it can."

As demand has risen steeply in 2010 and is expected to rise further in 2011, the market is watching closely whether OPEC can release at least some of its spare capacity to prevent prices from soaring to around USD 150 per barrel as they did before the crisis struck in summer 2008.