Oil futures may be lower in the short term amid recent projections from OPEC about lower than expected demand for the foreseeable future.
In a recent statement at the conclusion of its latest meeting, OPEC cited the improvements that have been seen in the economy recently, but also cited “serious threats” to oil demand in the foreseeable future.
Some examples cited were the rising public debts in the world’s most advanced economies, as well as what was called “rising protectionism” in some countries and weak demand in general. Typically, oil demand rises and falls with economic activity, as was witnessed last year at the height of the recession.
According to OPEC, world oil demand for crude oil will rise “marginally” in the coming year, but that will be offset by an expected increase in non-OPEC supply. As a result, OPEC indicated that 2010 is likely to be the third consecutive year of lower worldwide demand for its products.
Because of this, OPEC indicated that it would keep its current oil production ceiling unchanged. This indicates that along with anticipating stagnant demand for its products, OPEC remains largely satisfied with the current price range of crude oil.
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