Nevertheless, prices "are likely to be particularly vulnerable to economic developments during the upcoming low-demand second quarter," the report said. "The persisting stock overhang, low seasonal demand and start of refining maintenance point to the need for continued caution over the coming months as market volatility is expected to remain."
Oil prices had been moving higher since the beginning of the year, the cartel noted. While that "can be partially attributed to a global cold snap, it cannot fully explain such a sharp increase, especially as inventories remain high enough to cope with any sudden jump in winter demand," Opec said, insisting that fundamentals were "not behind" the surge.
In the coming months, price developments would largely depend on a continuation of the current relatively positive outlook for the global economy, especially in key countries such as the United States and China. "Should developments turn out to be less positive than expected, market attention will revert back to weak oil fundamentals." The outlook for the global economy this year was "semi-rosy ... following two years of devastating financial crisis," the report said. A recovery would help reduce the loss in the oil demand in advanced economies "to only 0.12 million bpd year-on-year in 2010."
Most of the recovery was anticipated in the United States, which accounts for nearly 25 percent of total oil consumed world-wide. But an improvement was forecast in all developed economies, Opec said. On top of that, developing countries "are forecast to experience some recovery in all economic activities leading to smooth growth in oil demand estimated at 1.0 million bpd." In addition, cold weather was affecting the northern hemisphere which has led to additional demand for winter petroleum products, Opec said.