Opec braces itself for weak year

16/02/2009

The Organisation of the Petroleum Exporting Countries (Opec) has revised its estimates for global crude demand downwards in its latest monthly report.

Although it insists that the decision to cut production by 2.2 million barrels a day has helped to support crude prices, continued economic weakness is expected to subdue demand for crude and derivatives such as heating oil and DERV throughout the coming year.

The cartel announced that basket prices for crude increased by 7.6 per cent over the course of January, with the average for the month standing at $41.52 (£29.12) a barrel.

Harsh winter weather conditions were said to have increased demand for derivatives such as heating oil, helping to support crude prices.

Meanwhile, the gas crisis in the Ukraine was also said to have an inflationary effect on crude prices as energy supplies dwindled in a number of European countries.

Last month, the cartel attributed the sharp downward trend in oil prices witnessed at the end of last year to the deepening economic crisis in many Western countries.