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No Pre-Oct OPEC Talks If Oil Holds $70/Bbl - Bank

Mar 19, 2010

[Dow Jones]--OPEC, which kept oil output policy unchanged Wed for the 5th time in 12 months, won't have to meet again to review the market until the scheduled Oct. 14 meeting, if crude oil prices hold above $70/bbl, Deutsche Bank analyst Adam Sieminski said in a report Fri. OPEC said it is happy with crude near $80/bbl, but "left unsaid at the meeting was what level of prices would be seen as 'too high' in view of the economy," he said, adding the bank's economists believe a return to triple-digit oil price "would threaten the global recovery." Sieminski warns that "if dollar strength continues and monetary and fiscal stimulus is withdrawn, oil prices will likely suffer. If oil price continues to move strongly upward, it may raise a paradox concerning the impact this would have on the outlook for the economy." Sieminski admits he's "among the least bullish" of analysts on oil prices, seeing $65/bbl for WTI this year, up just 3.7% vs 2009. Among reasons to be cautious: Global manufacturing may weaken as industry inventory cycle slows and new orders plateau; oil supply/demand balance could soften with rise in non-OPEC supply, unsanctioned higher OPEC output, and seasonal 2Q weakness; flattening forward crude price curve may draw down inventory and increase supply, and possible weakness in China short-term oil demand on slower stimulus and monetary pressures. "These forces do not portend a 'crash' in oil prices, but do suggest to us a bout of weakness in H2 is likely," Sieminski said.

(david.bird@dowjones.com; 212-416-2430).