March 23 saw the price of the finished oil product to go upward in China, an average increase rate of around 7 percent. This is the 4th time for the oil price to increase since March 31 last year. The international oil price hike is a direct cause for the oil price increase in China.

Since the beginning of the year the international oil price started to rise abnormally, indicating a rise as unexpected. The direct cause incurring the oil price rise recently is, first of all, the climate factor. It has witnessed a sudden fall of the temperature in American and Europe since the late period of February, making the needs of oil for warming-up to rise very quickly. The second is the factor of the USA. Recently we saw the US announce to the public that the gasoline and finished oil product reserve at home was going down and its daily need of crude oil in March saw an increase of 800,000 barrels as against the same period of last year. The third is the factor of needs. The international energy agency announced on 11 March, to add another 330,000 barrels in oil production daily for the global oil needs to a total of 84.30 million barrels/per day and the fourth is the OPEC factor. The OPEC which has ever played a significant role for controlling the rise and fall of the oil price is now holding an ambiguous attitude towards the policies concerning the supply and price of the oil. By the end of last year, the OPEC made a decision to cut down one million barrels daily in oil production and let out information that it was going to extend the scope for oil price control and recently we saw the quarrel over the problem for a daily increase of 500,000 barrels.

As a matter of fact, for the OPEC, the actual daily output of oil has long ago surpassed a daily increase of 500,000 barrels over the quota of 27.50 million barrels with the daily output of the 11 countries to have reached 29.60 million barrels in February. The fifth is the factor of speculation. The global stock market has been at low ebb since the beginning of the year and the Standard Poor's index that indicates the trend of the 500 US huge stocks saw a drop of 1.8 percent with the Dow Jones industrial average price index to go down 1.4 percent while the depreciation of the US dollars has continued for three years on end. Under such a circumstance the oil market has naturally become the best place for the offset funds to carry on speculations. The influx of a great amount of floating capitals has come to form a very big economic bubble, thus intensifying the alarm and price fluctuation in the market. These are the important causes for which the international oil price has been unable to be maintained stable in recent few years.

Along with the temperature to become warmer and the increase of the OPEC oil production to turn gradually to normal, the international oil price is expected to go down with the supply and demand relations tending to be at ease in the months to come. As regards the trend of the international oil market in the time to come, there won't be any oil crisis to break out and the extra-high oil price must not be continued though the low oil price is hard to reappear. First and foremost, there is no change in the supply and demand matrix yet the remained output capability appears to be lower than the level in history. We are going to see a continuation of the matrix in which the supply will be a little higher over the demand in international oil market with the supply and demand to remain basically on a balance.

According to the estimation of the IEA, the OPEC has a remaining daily output capability of 2.22 �C 2.72 million barrels, which are lower than the remaining output capability of an average 3 �C 4 million barrels daily in the past 10 years. Moreover, the global oil refining capability is not sufficient enough and if the oil producing countries increase production the oil refineries are still unable to raise their production all at once. Aside from this, we see strategic changes of transnational corporations. Historically speaking, the oil price hike incurred more often than not a new high tide of investment and then followed with the supply over the demand and a plummet downturn of price. We saw the case ever happened in the 1980s and 1990s.

However, the transnational corporations have turned their focal attention to the stock prices and benefits instead of more investment for exploration of new oilfields. They think that they will be much safer to get profits by purchasing oil from the Wall Street than to explore and develop new oilfields in the Middle East and Africa. Therefore, to curb the oil price fall due to an expansion in production will be able to help avoid the big downturn of the oil price and ensure the higher benefit from the stock market. The last is that the oil producing areas are, relatively speaking, mostly the weak ones geopolitically. The situation in Iraq continues to be in turmoil; the nuclear crisis in Iran has begun to come to the top while the political situations in Nigeria and Venezuela are changing and the safety of facilities for oil production and refinery and transportation as well, these are all problems that are able to exert impact in the international oil market.

To put all the aforesaid in a nutshell, the price trend of the petroleum as a strategic resource will not only be affected by the basic factor of the supply and demand relation but also hit by the non-basic factor with the price fluctuation tending to be a thing quite normal.

By People's Daily Online