Oil prices rise, but unlikely to spike again

BEIJING, May 23 (Xinhua) -- Crude oil prices are
likely to continue rising, but there will be no major spike in the market in the
coming months as world oil consumption still remains weak, analysts said.

Global crude prices, which plummeted from 147.27 U.S.
dollars per barrel to below 40 dollars last year, have witnessed a moderate yet
steady rebound over the past months, reaching 61.5 dollars on Thursday at the
New York oil market, marking a three-month high.

The reason for the recent rally is that the U.S.
government reported a surprise decline in crude and gasoline inventories as the
driving season approaches, Wall Street Strategies' senior research analyst,
Conley Turner, said.

"The rally in oil is also supported by the fact that
there is a sense of growing optimism among market participants that the economy
is not getting worse and is in fact, turning a corner," Turner said.

However, analysts also warned that the current oil
price levels were not in line with the underlying weak global economic
conditions. They said that runaway crude oil prices were therefore unlikely to
be seen in the coming months.

"If you have a look at the fundamentals in the market
at the moment, the inventories in the U.S. are still at 19-year highs and
there's no real indication that demand has re-entered the market yet," Ben
Westmore, an energy analyst at the National Australia Bank, said.

The International Energy Agency (IEA) said on Friday
that global oil demand would hit a 28-year low this year because optimism about
an economic recovery was not reviving the appetite for energy.

The rebound in oil prices is largely connected with
the performances of the financial markets, instead of the balance of supply and
demand, the Paris-based organization said, adding that the world's oil demand
has shown no signs of recovery with the absence of fundamentals to back the oil
market.

Xie Guozhong, an independent economist in China, also
believes that the recent price rebound cannot be explained by analyzing the
balance of supply and demand, as financial markets play a major role in pushing
up prices.

The large scale stimulus packages launched by some
developed economies boosted capital flow into the international oil market
raising prices, Xie, a former Morgan Stanley chief economist for the
Asia-Pacific region, said.

Judging by the current global economic situation,
analysts said oil prices may occasionally rise above 63 U.S. dollars per barrel,
but it was unlikely to see any major price hikes this year. They said for the
most part oil prices would fluctuate between 50 and 60 dollars.

According to a short-term outlook released last week
by the Energy Information Administration of the U.S. Energy Department, prices
are expected to average about 55 dollars per barrel for the rest of 2009, and 58
dollars per barrel in 2010.

Interview: Building Asia's own demand key to recovery

Special Report: Global Financial Crisis

By Zhou Erjie, Xu Lingui, Wang Jingzhong

BALI, Indonesia, May 5 (Xinhua) -- Building up the demand of Asian countries, both domestic and intra-regional, is crucial to help Asia recover more quickly than the rest of the world, said Jong-Wha Lee, acting Chief Economist of the Asian Development Bank(ADB) in an interview with Xinhua.

"Asian countries should do at least two things. One is to strengthen domestic demand and the other is to make big the regional demand, because this is very difficult time to rely on external demand for their source of growth," said Jong-Wha Lee on the sidelines of ADB's annual meeting ended Tuesday in Bali, Indonesia.

Export-reliant Asian economies are being hit hard by collapsing demand in the United States and Europe, as recession-hit consumers and companies cut back on spending.

ADB estimates that the crisis will keep more than 60 million people in developing Asia trapped in absolute poverty this year, and nearly 100 million more in 2010.

"Fortunately, Asian countries have more room to cut the policy rate, if the situation becomes deteriorating. Asian countries mobilize fiscal stimulus packages very actively, aggressively and very responsibly. So fiscal stimulus packages, especially like those adopted by China, (South) Korea and Japan would help to strengthen domestic demand," he said.

"China has been doing very well. Credit growth still maintains double-digit and actually is increasing. Fiscal stimulus was coming in," said Lee. "This time, China responded very quickly, earlier than other Asian countries and that's why we see some positive signs coming earlier than other countries."

In terms of boosting intra-regional demand, the economist called for cooperative efforts to do it simultaneously, mobilizing resources to build the regional demand.

"We need to trade more, we need to provide certain regional mechanism so as to strengthen trade and investment and financial transactions, like the CMIM (Chiang Mai Initiative Multilateralization) and Asian bond market. It will all do help to strengthen regional demand," he said.

China's domestic market is important to the region, Lee said, as Association of Southeast Asia Nations (ASEAN) rely on China for more than 30 percent of their exports and the most important trading partner of Japan and India is both China.

"Our forecast for the Asian developing counties as a whole for 2009 is 3.4 percent. This is a significant slowdown from the 6.3 percent in 2008, but Asian countries will show a mild recovery in 2010, the growth rate will be more than 6 percent," Lee said.

"I think Asian economy is very close to the bottom. The big question is that how long they would stay at the bottom, it would be a long and hard process to get to recovery," he added.

The economist also contended that Asia's voices in the global institutions should be increased.

"Asia's economy has increased significantly. Now more than half of the (world's) population is living in Asia. One third of GDP in terms of Purchasing Power Parity (PPP) are produced in Asia, including Japan. But if you look at the global institutions, how much can you reflect Asia's voice and Asia's participation?" he asked.

"As much as our economic size becomes increased, our influence should also increase. That does not mean we need to have certain power, it also comes together with our responsibility. We try to be responsible to the global institutions," Lee said.

US, China economic projects to increase international copper demand

Special Report:Global Financial Crisis

LUSAKA, March 4 (Xinhua) -- Zambia's Standard Chartered Bank has said the stimulus package in the United States and China will increase demand for copper and prices should appreciate, Zambia Daily Mail reported on Wednesday.

The 787 billion U.S. dollars stimulus package in the United States will include expenditure on copper-intensive projects such as public transport and school buildings while China has a stimulus package of 568 billion dollars to boost the infrastructure market, which is copper-intensive, the newspaper said.

Meanwhile, the bank has increased its consumer banking deposit book to over 1.2 trillion kwacha (about 220 million U.S. dollars) as at December 2008 following the successful "Bank a Ride" campaign embarked on last year.

The bank's managing director Mizinga Melu said the campaign was aimed at increasing deposits and rewarding existing customers.

Melu said the campaign allowed the bank to remain open for business and focus on continued lending coupled with product innovation and better service delivery.

"Whilst it is generally accepted that the economic environment in Zambia, like the rest of the world, is highly challenging to most businesses. We remain confident in the economic prosperity of this country," she said.

She said copper prices were expected to rebound this year as demand increases with a weakening US dollar, adding that in China, wire and cable manufacturers were reported to have increased production in recent weeks with usage rates now running at 90 percent.

"Standard Chartered Bank continues to believe that demand will be a key driver for copper demand in the months ahead," she said.

"In the short-term, we forecast that demand for copper will remain fairly weak with prices averaging between 3,200 and 3,600 U.S. dollars per tonne. Experts say the year end closing price will be just above 3,700 dollars," she said.¡¡

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