Oil prices to remain high despite oversupply: Minister

Minister of Energy and Mineral Resources Purnomo Yusgiantoro estimated that the oil price would continue to fluctuate above the current level of about US$52 per barrel despite an oversupply condition in the world's market, Suara Karya reported on Saturday.

Speaking to reporters on Friday, the minister said that there would be an oversupply of about 2.4 million barrels per day in the world's market in the second quarter of this year. "But the price would remain high due to the estimated higher demand from China," he said.

In addition to the expected higher demand from China, political instability in some oil producing countries would also contribute to the high oil prices, the minister said .

Meanwhile, Maizar Rahman, the Indonesian representative in OPEC, said the oil prices would continue to fluctuate between US$50 to US$52 per barrel until the end of this year despite the oversupply condition.

He estimated that the oversupply of about 2.4 million barrels per day would decline in the second quarter due to the high demand from China.

Maizar, however, estimated that the crude oil prices would decline in 2006 to between US$45 and US$48 per barrel due to the decline in the oil demand in the world's market during the year.

"OPEC hopes oil prices would not drop below US$40 per barrel in 2006," he said. (*)