OPEC: Weak Dollar, Not Supply, Keeps Prices High
The weak dollar is the main factor keeping prices at high levels, not the supply of oil, and that situation is likely to continue, current OPEC president Chakib Khelil, who is also Algerian Oil Minister, said on Tuesday.
Oil, which hit a record high of $111.80 a barrel last month, was trading around $108 on Tuesday.
Supply is at a very reasonable level compared with the past, and nobody can say how long the high prices are here for, but the outlook is not encouraging, Khelil said.
"We see more lowering of the value of the dollar in the future and we should see more impact on the oil price," he added. "Nobody could say, but my guess is that oil could stay within $80 to $110 for the rest of the year."
The European Central Bank and the Bank of England meet on Thursday to decide on interest rates but despite the euro reaching record highs against the dollar, the ECB is expected to hold on rates to fight price rises.
"We don't see very coordinated actions by the Europeans, by helping the dollar get lower. There is no coordinated action between the (Federal Reserve) and the European system," Khelil added.
The cartel is worried about the economic situation in the U.S. and oil producers must have a clear idea of the volumes that will be needed, as there is no interest in building capacity which will not be used, he said.
"We are ready to secure supply but we need to know how much," Khelil said.
-- Writing by CNBC.com