ABU DHABI (Reuters) – Oil prices could fall again because fundamentals are still weak, OPEC’s director of research said on Tuesday.
U.S. crude hit a seven-month high over $68 a barrel on Monday amid optimism that the economy would recover, although it retreated below $68 on Tuesday.
But oil markets were still weak and the price rally may be unsustainable in the short term, said Hasan Qabazard, director of research division at the Organization of the Petroleum Exporting Countries.
“Prices could still weaken again, this rally is driven by funds rather than fundamentals,” Qabazard told Reuters on the sidelines of an energy conference.
Stocks in industrial countries were 200 million barrels above average and there were 130 million more barrels in ships floating offshore worldwide, Qabazard said.
There were signs inventories were beginning to fall in top consumer the United States and that gasoline demand was looking up, he said.
It would take around six months for global inventories to return to average levels, he said.
OPEC, supplier of a third of the world’s oil, kept output steady at a meeting last week as signs the worst may be behind the global economy outweighed concern about high inventories.
Qabazard reaffirmed the price needed to be around $70-$80 a barrel to encourage the investment needed in projects across the energy sector to meet future demand.
Many projects had been delayed, and some of those could be canceled if the price stayed below the required levels for long, he added.
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