Energy Desk News

Tightened Supply, Severe Winter Could Drive Oil Even Higher

Oil importers last week were facing the prospect of a severe winter price spike as OPEC exporters prepared to turn the screw on stringent supply restrictions. Benchmark Brent crude in London struck new 31-month highs last week at $22.30 barrel -- another 32 cent rise on top of Tuesday's 60 cent jump which took prices above $22 for the first time since February 1997. "As long as key producers give no hint of relaxing output restraint the price of Brent will probably approach $25 in the fourth quarter," said Mike Barry of London's Energy Market Consultants. "The latest price rise is certainly a vote of confidence in OPEC compliance with its output cuts," said Peter Gignoux, head of the London energy desk at brokers Salomon Smith Barney.