China can trigger crude price rebound.

Abu Dhabi: AaChinese demand will trigger the rebound in international oil prices which are currently teetering below $50 (Dh183.50) per barrel due to the global economic crisis, say oil market experts.

"China is the swing consumer, just as Saudi Arabia is the swing producer," Dalton Garis, associate professor of Economics and Petroleum Market Behaviour at the Petroleum Institute in Abu Dhabi, told Gulf News.

"It [Chinese oil demand increase] will take one or two years, but it's going to happen. Unlike the US, the Chinese are capable of collective action, which will help them recover from the financial crisis much more quickly than others," he said.

Plummeting oil prices as a consequence of the global recession have slowed the demand for oil worldwide.

The average official selling price (OSP) of Abu Dhabi's crude oil grades fell a whopping 53.01 per cent on year to $44.09 a barrel in February in line with the global oil market price trends.

The UAE is the fourth-largest oil producer in the Organisation of Petroleum Exporting Countries (Opec) and Abu Dhabi produces more than 90 per cent of its oil.

Garis said he expects international oil prices to shoot up to around $70 a barrel by December, but said in the US - the world's top oil importing country - the demand increase would be staggered as the country seems to "owe everybody money at a time when it itself needs more money to stimulate the economy."

Kate Dourian, Middle East editor of global energy information provider Platts, agreed, saying oil demand growth is mainly expected in China and parts of the Middle East.

"There will be demand growth in China, though it's going to be a lot weaker," said Dourian.

Oil was trading higher on Tuesday as expectations that Opec may reduce output again outweighed last week's weak US economic data.

US crude was trading close to $48 a barrel in afternoon trade on Tuesday, while London Brent crude was a bit lower at $45.64.

Iraqi Oil Minister Hussain Al Shahristani said on Saturday oil prices could not continue at such low levels and that Opec may consider another output cut at the group's next meeting in Vienna.

Some members of Opec have already raised the prospect that it may cut its output further to boost oil prices at its March 15 meeting.

"I think Opec would be very wary of cutting output again as it wouldn't want to shock an already fragile global economy," said Dourian.

Opec has agreed to lower its production by a total of 4.2 million barrels per day, about 5 per cent of daily world demand, since last September to bolster prices and counter declining consumption.

"Compliance [with output cuts] is going to be a key issue. [The] market will not take Opec seriously if it doesn't see a high level of compliance with the already agreed cuts," Dourian added.

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