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Global oil prices to stay above 100 USD for long: BOK

11-07-2011 12:05 BJT

SEOUL, Nov. 7 (Xinhua) -- South Korea's central bank said Monday that global oil prices were expected to stay above 100 U.S. dollars per barrel for a protracted period of time due to tight supply and a potential speculative investment.

According to a report released by the Bank of Korea (BOK), the prices of Dubai and Brent crude oil topped the 100-dollar mark in February due to geopolitical jitters in the Mideast and the North African region, and stayed at the triple-digit level until recently despite downside pressures such as Europe's debt crisis, the U.S. economic slowdown and the possible end of political turmoil in Libya.

The BOK attributed the higher oil prices to solid industrial activities in major economies, slowing growth in global oil production and lower level of global oil inventory.

Major economies such as the United States, Europe and China showed good performance in terms of industrial production. Manufacturing activities in the United States rebounded since August, while the euro-region's production in information technology (IT), auto and machinery component sectors remained solid recently. China's industrial production sustained its solid growth trend, according to the BOK.

Meanwhile, oil production slowed down. Oil production by non- OPEC members was forecast to post the smallest since the 2008 global financial crisis, while OPEC members were unlikely to raise their production as the member nations did not want to see the global oil price go down, the BOK said.

In addition, global oil inventory stayed below its five-year average level. Oil inventory for OECD members stood at 4.22 billion barrels in August, 0.03 billion barrels lower than its average over the past five years, according to the BOK.

The BOK said global oil prices would likely stay above 100 U.S. dollars per barrel for a considerable time due to the imbalances in supply and demand for oil, predicting that global funds may flow into the international oil market if flight-to-quality sentiment eases amid abated concerns over the European fiscal crisis.

Editor:Zhang Hao |Source: Xinhua

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