The recent strike in Nigeria, the threat of cyclone Claudette in the Gulf of Mexico, the strife torn effort to get the Iraqi production back on line and increased demand from the US, China and Japan have all conspired to keep prices above the OPEC nominated $28 ceiling.

The only positive impact on the market in recent weeks has been the deaths of the Hussein boys in Mosul, Iraq, which temporarily softened the market.

A commodities analyst at JBWere said that while they expect that the price for crude will continue a downward trend over the next 18 months, a precipitous fall in price such as they had previously forecast looks less likely.

Perhaps the greatest factors impacting the price so far has been the start of the American driving season (holidays) while oil inventories within the country are well below normal levels. Combined with production delays in the Gulf and Nigeria this has led to a supply fear and left crude stocks in the world's biggest energy consumer 11% below last year's levels.

Compounding this is the fact that Iraqi production has only managed to meet a fifth of the expected levels for June of 1.5 mbpd due to sabotage, the continuing economic crisis and the failure of the antiquated Iraqi production system.

To balance these factors OPEC and non-OPEC production is at high levels by historical standards, which should ensure prices do not reach the extremes of early March when it peaked around $38.

Early soundings from Gulf sources ahead of the July 31 OPEC meeting in Vienna suggest output levels will be left unchanged despite the high oil prices and Iraq's post-war failure to restore exports fully.