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Asian Petroleum Review : Jan-March 2011
18 "We think that it is a temporary phenomenon," said Richard Jones of the International Energy Agency. FUNDAMENTALS REASSERT THEMSELVES But most analysts think Chinese demand will keep soaring. Macquarie sees it rising at least 5 percent next year. Tighter oil markets may reverse a recent price rout. Crude has fallen 6 percent since hitting a 25-month high of $88.63 on Nov. 11. Neverthe- less, few forecasters have cut their bullish longer-term price outlooks. "Overall, we still see this dip as a buying oppor- tunity as the oil market continues to work its way through inventories at a rapid rate, " said JP Mor- gan analysts led by Lawrence Eagles in a note on Friday. Goldman Sachs sees oil prices rising above $100 in a year. In tight markets, supply considerations come to the fore. OPEC's top producer Saudi Arabia holds about two- thirds of the 6 million bpd spare production capacity among OPEC's 11 members who adhere to output tar gets, JP Morgan estimated. OPEC meets next month to discuss production, but most analysts don't expect targets to change. Saudi Oil Minister Ali al-Naimi said recently that prices be- tween $70 and $90 a barrel were comfortable for con- sumers. On most days this year, oil has traded in tight correla- tions, rallying, as it did on Wednesday, when U.S. equi- ties rise and the dollar weakens against a basket of foreign currencies. Tighter supply may allow oil to rise with less regard to whether other financial markets support it. "The tighter oil market may help oil prices break away from the correlations we've seem them trading in, " said Macquarie's Stuart. (Editing by Marguerita Choy and Lisa Shumaker) Thomson Reuters Asia Petroleum Review An oil rig belonging to Zion Oil and Gas in Karkur, northern Israel. REUTERS/Nir Elias