Oil price 1999 expected to stay down

Disarray in OPEC and a stubborn inventory overhang have seen the prospects recede sharply for a recovery next year in ailing oil prices, analysts said.
A poll of 10 investment banks and energy consultants projected an average price for benchmark North Sea Brent crude of just $ 13.51 a barrel in 1999, below the lowly $ 13.55 achieved so far this year.
Just about all respondents to the poll downgraded their forecast from a late-September poll, when the average was $ 15.22.

"Recovery is dependent on OPEC production restraint and whether demand unravels, particularly in Asia and the north American market," said Peter Bogin, associate director of Cambridge Energy Research in Paris.
Bogin said he revised his forecasts about $ 1.50 down to $ 12.00 for 1999.
Analysts said the sheer size of the global oil glut would hold prices down next year.
"This stock overhang is going to take a long time to clear," said Leo Drollas, deputy director at the Centre for Global Energy Studies in London. CGES has revised its 1999 full-year average down to $ 11.60 a barrel from $ 14.00.
"The inventories are coming down slower than expected," said Jonathan Wright, an oil analyst with Merrill Lynch. "The inventories might correct gradually through the first and second quarters next year."
Merrill Lynch revised its price forecast down to $ 13.50 from $ 17.00 for 1998. The company projected prices would average $ 16.50 by 2000 and $ 18 thereafter.

Oil producers are hoping for a cold winter to eat inventories away.
But recent temperatures in the north-east United States have been unseasonably high.
Even a bitterly cold winter in the world's biggest oil market may only drag oil prices up to $ 12.60 a barrel, Drollas of the CGES said.

Without help from the weather the market will look to OPEC to stabilise battered prices. But last month OPEC failed to take action to prop up the market.
The cartel neither extended current restraint beyond the agreed June 1999 limit nor agreed to deepen cuts.
Saudi Arabia accused fellow OPEC members of failing to abide by their pledged curbs totalling 2.6 mm bpd. The group plans to meet again in late March.
After Venezuela's election, President Elect Hugo Chavez said that his government would comply rigorously with oil production cuts.
"If OPEC doesn't cut, we'll see a further collapse in prices," said Roger Diwan, director of global oil markets at Petroleum Finance in Washington.
He added a March cut might come too late as seasonal demand was likely to tail off in February.
Rising Iraqi exports under the fifth phase of the United Nations oil for food programme will also keep pressure on prices.