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Monday, 01 December, 2008, 23:50 GMT | more >>

IEA calls oil price pow-wow



By Upstream staff 

The International Energy Agency (IEA) is set to host crisis talks with major producers, central banks and oil experts in a bid to determine whether current oil prices are justified by market fundamentals, according to reports.

The Financial Times said the talks, to be held in Paris on Monday, come as concern grows among policymakers about the causes of the recent oil price rises and its implications for inflation and monetary policy.

The move comes after crude futures soared to almost $110 a barrel yesterday, bolstered by fears of a recession in the US and continued weakness in the US dollar.

The Financial Times said the talks will include representatives from ExxonMobil, Total, Repsol YPF, Shell and ConocoPhillips, as well as delegates from a number of central banks including the European Central Bank.

Also present will be representatives from the New York Mercantile Exchange, the Intercontinental Exchange, market regulators including the US Commodity Futures Trading Commission and the UK's Financial Services Authority, as well as the International Monetary Fund and World Bank.

"Following the large flows of money into hedge funds and commodity index funds since 2003, there is concern that the oil price no longer retains its role as the best leading indicator of market conditions," the IEA said in a document setting out the agenda for the meeting.

Lawrence Eagles, head of the IEA's oil markets division, said that not all the blame should be put on speculation. He said previous rises had also been blamed on speculation, such as when prices moved above $50 a barrel in 2004, but that had turned out not to be the case.

He said: "With hindsight, those prices now seem to reflect the increasing cost of accessing and developing reserves. If it was a speculative push in prices, the speculators were right."

The IEA's monthly oil report, released yesterday, said the global economy had moved into an era of higher oil prices.

"Prices are unlikely to return to levels seen in the early part of this decade," it added.

The report added that "only a protracted and severe global recession would justify a sustained dip in oil prices below" $60 a barrel.

Despite of record prices and the US economic slowdown, the IEA said oil demand would be relatively robust this year, boosted by emerging economies such as China and the Middle East.


Wednesday, 12 March, 2008, 08:17 GMT  | last updated: Wednesday, 12 March, 2008, 10:36 GMT

Watching the numbers: Nymex traders watch oil futures hit another high yesterday
 

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