Oil prices will not rise above $40 a barrel even if Opec cuts output by more than two million barrels a day at its next meeting in March, a Kuwaiti oil official said in remarks published yesterday.
Musa Marafie, a member of Kuwait's Supreme Petroleum Council, the top energy decision-making body, told local daily Annahar that there was a large surplus in the market due to the non-compliance of several Opec members with previous cuts and that the economic slowdown would keep demand down for now.
Prices would rise again in the longer term due to a lack of investment in the sector.
"The decline in crude prices drove many international oil companies to cancel investments in new oilfields and this will reduce production in the long run and lift prices again," he told the paper.
US crude prices for March delivery settled at $37.51 a barrel on Friday, down from a record high of $147.27 reached in July last year, as the global recession has eroded demand for fuel. Opec has agreed to cut production by 4.2 million barrels per day (bpd), about 5 percent of daily world demand, since September to prop up prices.