Increased oil revenue projections are seen behind the current spate of massive arms purchases in Latin America, where huge oil discoveries have given Brazil a political and economic edge over its neighbors.

Oil exploration and development in Mexico and gas exploration in Chile have also been driven partly by expectation that a global recovery will push prices up. In Asia, ongoing negotiations on new oil and gas pipelines have been predicated on a steady oil price during a slow recovery this year and higher prices in response to greater demand with increased global economic activity in 2010.

CGES said a surge in oil prices was unlikely in the foreseeable future, unless there was a sustained global economic recovery or disruption in supplies due to trouble in West Africa or the Middle East.

"There will be little or no sustained upward pressure on oil prices until global economic recovery is firmly established and reviving oil demand begins to draw down bulging oil inventories, eventually eating into OPEC's spare production capacity," said the center, which is led by former Saudi Petroleum Minister Zaki Yamani.

Stockpiles of crude oil by consumer nations in the West, plus market perception that OPEC can quickly pump more oil, have kept the markets relatively calm, analysts said.

CGES cited recent OPEC price talks in Vienna as indication that the oil group preferred to wait for the recovery to begin and consolidate rather than try "to talk up oil prices."

CGES said, "For the time being at least, OPEC oil ministers signaled their broad satisfaction with oil prices in the $65-75/bbl range." Crude oil prices stayed within range of recent trading Tuesday but rose above $71 per barrel on the New York Mercantile Exchange.

At the Vienna ministerial talks, CGES said, "OPEC also expressed its determination not to undermine the prospects for global economic recovery, suggesting that it now regarded this, rather than commercial inventory levels, as the most important driver of oil prices -- at least for now."

CGES said its current projections showed the likelihood of the first signs of a modest year-on-year recovery in global oil demand in the final quarter of 2009, reflecting in part the huge year-on-year fall in the final quarter of 2008.

However, CGES said, "this very modest growth does little to change the annual average picture, and we still see global oil demand contracting by 1.7 million barrels a day this year."

Industry analysts said that outlook could worsen if oil prices rose beyond the current range in response to political developments that worried the traders. The prices could also drop below the current range without stimulating a recovery in the short term, precipitating OPEC production cuts, the analysts said.

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