Opec output decision 'a sign of strength'

17 March 2009

Oil prices could begin to increase over the coming months, despite Opec's decision not to cut production further, an analyst has claimed.

The cartel announced on Sunday that it would not be implementing any additional reduction in supply, focusing instead on enforcing stricter compliance with existing cuts.

While this might have been expected to exert downward pressure on oil prices, values rose on Monday on the back of a recovery in the global stock market.

Chris Jarvis, senior analyst at Caprock Risk Management, told Reuters that Opec's decision not to cut supply "is a sign of strength, not weakness", anticipating that prices could continue to rise.

"We expect the markets to rally in conjunction with the global equity markets," he commented.

This could prompt some residents in the UK to stock up on supplies of home heating oil while crude prices remain low in order to avoid any future cost increases.

US crude currently stands at $47.35 (£33.80) a barrel, having climbed $1.10 on Monday, while London Brent crude settled down 95 cents at $43.98.

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