More oil was released on world markets in June and July than in the recent past as part of recent market maneuvers at the International Energy Agency, which represents consumer industrial countries, and at the Organization of Petroleum Exporting Countries.
Traders' calculations that excess oil would push prices down didn't meet the expected with market results, however.
The reason, the London Center for Global Energy Studies said in its Monthly Oil Report, was that the release of crude oil stocks by the IEA created its own dynamic as markets noticed the lower reserves and robust consumer demand in Asia kept the prices buoyant.
The resulting scenario raised the question: What else can the world community do to make crude oil prices friendlier to the global recovery strategists? At current prices, oil is likely to continue inhibiting economic recovery.
OPEC lead producer "Saudi Arabia has begun its unilateral output increase, raising production by more than 500,000 barrels a day in June," CGES said, citing the first of the four factors keeping the oil price up.
IEA has also begun to implement its surprise 60 million-barrel release of strategic stocks but it remains unclear how much of that has actually entered the market.
"Despite rising supplies, stock cover is low and oil prices are as high as they were before either announcement was made," CGES said.
Crude oil prices on the New York Mercantile Exchange settled Monday at $95.93 a barrel, the slight drop on the opening day of the week attributed mainly to worries over the U.S. debt limit and the eurozone debt crisis.
Overall, however, prices remain too strong for comfort, analysts said.
The uncertain macro‐economic outlook for the member countries of the Organization for Economic Cooperation and Development is being more than offset by continued strength in developing‐world oil demand, CGES said.
The oil market is concerned about the adequacy of forward cover during the coming winter, since now is the time to build stocks. However, the global oil inventory build in the second quarter of this year was tiny -- about 190,000 barrels a day -- and further stock decreases are likely in the rest of this year, CGES said.
"The global macroeconomic scene continues to be fraught with perils, notably the eurozone sovereign debt crisis, which is gathering momentum like a run‐away train, and the standoff in the U.S. Congress over raising the $14.3 trillion limit on the federal debt, which is threatening to immerse the U.S. in its own sovereign debt maelstrom," CGES said.
In the past the oil price wouldn't have been especially sensitive to the euro-dollar rate's daily gyrations, CGES said, "but these days oil is an asset play, subject to wider influences."
The center said oil prices could remain high by a mixture of uncertainties and an unexpected spurt in demand from developing economies, failure of OPEC members to deliver on promises of increased production and export and such diverse uncertainties as the start of the hurricane season in Mexico.
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