Lower demand behind falling oil prices
October 20, 2014, 10:58 pm

An oil refinery in Iran. Earlier this week, Tehran said it would not call for an emergency OPEC meeting [AP]

“Isn’t it great? It’s really fallen a lot since the summer,” he said.

Gasoline prices in North America, and most of the world, have been steadily falling as the price of a barrel of oil appears to hover around $85. In June, when fighters of the Islamic State of Iraq and Syria (ISIL) overran Mosul in Iraq’s oil-rich north, prices stood at $105.

It was during the early summer months that energy speculators believed that the crisis and violence in Libya would threaten oil production there.

That never materialized and the Libyans, despite their turmoil, have managed to steadily increase production from over 700,000 barrels a month to over 900,000 barrels a month.

Supply is overtaking demand, many experts say, and with waning economic prospects in Europe – and a stabilizing of the Chinese powerhouse – the thirst for oil appears to be settling down.

China, which is one of the world’s biggest oil importers, is expected to release a GDP growth forecast this week. Many experts believe that while robust, the economy is likely to slow to 7.3 per cent growth rate. This will have some effect on oil demand.

Many analysts will also be looking to a meeting of Oil Producing and Exporting Countries (OPEC) in November. Earlier this week, Iran and Saudi Arabia – among the world’s largest producers and exporters – backed away from calling an emergency OPEC meeting to discuss the falling prices.

There is some consensus that oil prices will likely stabilize between $75 and $90 a barrel in the coming weeks. But a fall to $11 a barrel such as during the year 2000 is highly unlikely.

The BRICS POST with inputs from Agencies