LONDON, Oct. 25 (UPI) -- It may be too early to tell if the current 10 percent rise in crude oil prices is here to stay, the London Center for Global Energy Studies said Monday in its monthly oil report.
Crude oil prices rose during the weekend, adding $1.39 and reaching $83.08 per barrel in New York.
"It is perhaps too early to declare that the 10 percent rise in prices as 3Q10 ended and 4Q10 began marks the shift to a new trading range for oil," said the think tank, in reference to oil price shifts at the end of September and in early October at the beginning of the fourth and final quarter of 2010.
"The price of the OPEC basket of crudes has slipped back below $80 a barrel, while benchmark grades have not risen as high as they did in May, nor have they stayed above $80/bbl for anywhere near as long," said CGES, citing price trends in the varieties of crude oil exported by OPEC or traded internationally, including North Sea and U.S. oil.
The center said recent price spikes could be due to developments in both the oil trade and financial markets and linked to global economic trends since the 2008 downturn.
However, it warned, "both these drivers for higher prices could reverse very quickly."
OPEC exporters have been pushing for higher prices in response to rising import costs brought on by a weak dollar.
The center also cited uncertainties over the role spare capacity for global oil supplies could play in restraining further and prolonged rises in crude oil prices. "Spare capacity throughout the oil supply chain ought to limit upward price movements but only if that capacity is used," CGES pointed out.
The report said "many conflicting forces" at work could make it harder to predict the outlook for crude oil prices in the coming period.
Unless the Northern Hemisphere suffered a cold snap, pushing up oil consumption, demand would rise more slowly in the closing part of the year than in preceding months, said the center.
Analysts of Chinese imports, European holdings and U.S. crude oil stocks cited in the CGES report suggests there's plenty of oil about in storage. The French strikes added to those reserves as tankers carrying 25 million-30 million barrels of oil couldn't leave for their destinations.
"All of these factors ought to limit any upward pressure on oil prices in the coming months," the seasonal study said. "On the other hand, although there is ample spare capacity throughout the oil supply chain, this will only prevent oil prices from rising in the face of stronger demand if it is utilized promptly when needed," CGES said.
