Crude oil prices will continue to fluctuate at a high level this year, according to a Chinese government report.

The crude oil market, dominated by a fragile balance of demand and supply, will be sensitive to various influences, says the report by the National Development and Reform Commission (NDRC), the domestic price regulator in China.

Climate change, geopolitics and policies of the OPEC oil cartel will result in short-term price fluctuations, the report says.

Slow growth in demand and high stocks of crude oil globally will have a downward impact on prices, while a large-scale increase in non-OPEC supplies will improve the balance between global demand and supply.

It says that if no unexpected incidents occur, global oil prices will remain high in 2007, with the average price of Brent crude futures expected to stay at 60 to 65 US dollars a barrel, only slightly lower than the general level in 2006.

The report also projected that prices of production materials in the domestic market will continue to rise, mainly because China's economy will maintain its growth momentum, the supply of raw materials and fuel will remain tight, and tax reforms on resources products will push up the cost of production materials.

The NDRC estimates that prices of production materials will increase by two to three percent in 2007, slightly lower than the growth rate in 2006.

Source: Xinhua