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By Benedicte Gravrand, Opalesque London:

Energy markets, specifically crude oil, the deepest and most liquid of all the commodity sectors, are heavily affected by geo-politics, said Claude Lixi, fund manager at Galena Asset Management, a commodity fund house which is part of the global trading group Trafigura. He also reminded his audience, at yesterday's Jetfin conference on commodities and energy in Geneva, that OPEC produces about 43% and non-OPEC 57% of global production.

The oil market as it stands today saw a decline in demand of 1.7mmb/d (million barrels per day) or 2% during the global recession. While non-OPEC supply grew by 1.1mmb/d, OPEC applied supply cuts, its spare capacity increasing by 2.3mmb/d to 3.7mmb/d. Since the start of the year demand for oil was on average of 84.1 vs. a supply of 84.7.

Lixi expects world oil demand to come back to previous levels (although with a different regional split), and non-OPEC supply growth should slow significantly.

"In conclusion we should go back on drawing oil stocks by the second half of 2010," he said. Oil prices went from $37 in March to $82 last week, but oil producing countries may still try to hike prices, he added.

WTI crude oil plunged -2.6% to $77.46; ......................

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