US efforts to reign in “extreme” speculation in oil markets should help keep prices between $70 and 80 per barrel, a range that will allow Opec and oil companies to invest in new projects, Opec Secretary General Abdullah Badri said today.
The United States has targeted position limits to help reign in speculation in energy markets, blamed by some for oil’s price spike to near $150 per barrel in 2008.
“Since the Americans are trying to have influence on the excessive speculation, the market knows there is some watchdog there so the price went back to normal,” Badri told reporters gathered at a press conference ahead of the International Energy Forum in Cancun this week.
After hitting record highs in July 2008, crude prices dropped below $33 a barrel, hitting the economies of producer nations, as surging prices and the global recession hit fuel demand in the United States and other developed economies.
Crude has traded between $70 and $80 per barrel for much of this year, a level Badri said had promoted Opec to restart 35 projects that had been postponed due to the crash in oil prices.
“This is a price that permits us to invest,” Badri said in a Reuters report. “This price range you see is stable.”
In New York today, West Texas Intermediate crude closed up $2.17 at $82.17 per barrel.
A person familiar with Saudi Arabian oil policy today said that the Kingdom was also comfortable with the $70 to 80 level.
Badri said that oil demand, rebounding from the economic crisis, should rise by 900,000 barrels per day (bpd) this year, with most of that growth coming from China and India.
The Opec official added that compliance by Opec members with production cuts, agreed in late 2008 to help support prices, should be improved.
“We were able to implement about 80% in the first three, four months … last month it was 54%,” he said. “I’m not very happy with that percentage. I hope all member countries would adhere to that decision.”