Dubai Crude to Stabilize at $107 per Barrel: Report

A domestic think tank said yesterday that improvement in the world oil supply in the second half of the year and a stabilized dollar will stop the surge in oil prices.

The Korea Energy Economics Institute said in a report that Dubai crude will fall to 107 U.S. dollars per barrel in the second half for an annual average of 105 dollars.

The new forecast is 13 dollars lower than the 120 dollars suggested by the Council on International Oil Prices.

The report also said the U.S. economic slowdown and oil subsidy cuts in developing Southeast Asian countries will reduce oil demand in the second half by an average of 700,000 barrels a day.

Oil supply from OPEC member countries will remain the same but other oil-producing nations such as the United States, Sudan and Brazil will produce oil in new oil fields, increasing production to an average of one million barrels a day.

Improved supply and a more stable U.S. dollar will stop oil prices from rising, as the speculative factor will drop out of the oil market.

But if hurricane damage is greater than usual or the Middle East situation worsens, oil prices are expected to rise to 140 dollars per barrel in the second half of the year for an annual average of 121 dollars.

If a strong dollar encourages financial investors to buy in the stock or bond markets and if instability in Nigeria wanes, oil could fall to 95 dollars per barrel in the second half for an annual average of 99 dollars.

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