Business Monday: Oil price trends uncertain, analysts say

Although oil exporting countries remain optimistic global demand will push crude oil prices higher, there remains no immediate signs of this occurring, according to some industry analysts.

Since the failed OPEC ministerial meeting in April, crude oil prices have fluctuated between 48 dollars US and 45 dollars, which is a temporary blessing for small open economies such as Barbados, which expend scarce foreign exchange earnings on imports.
But OPEC, the once powerful cartel, remains optimistic demand will increase in coming months and with it higher prices.

At the same time, Saudi Arabia has been showing no indication of a reduction in its oil production levels, while Iran has also been focused on higher production, now international sanctions have been lifted over commitments on nuclear developments.

Some international analysts, however, cite the strong US dollar, prospects for higher interest rates in the US and other considerations, to support a continuing tight rein on crude prices. The US Energy Information Agency (EIA), in a recent short-term report, said the average price for West Texas Intermediate oil is expected to be US$44 in November.

In Barbados, economists are watching the price movements as they relate to inflation and other economic considerations. A request by Barbados Light & Power Co. Ltd to be given permission to hedge on international crude oil prices is also the subject of an ongoing regulatory consultation.

These developments are likely to come up at a regional conference and exhibition organised by the Barbados Renewable Energy Association in November. The event has as its theme: “Caribbean Sustainable Energy Independence : Making It Happen”. It is being held in association with the Central Bank of Barbados, and backed by the Government of Barbados as part of its 50th anniversary of independence celebrations.

Local interests, including investment, pricing and policy are expected to be addressed between November 10 and 11 at the Lloyd Erskine Sandiford Centre.

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