Oil prices to stay $50-$60 this year
Oil prices to stay $50-$60 this year
Leony Aurora, The Jakarta Post, Jakarta
Global oil prices are likely to remain between US$50 and $60
throughout the year amid strong demand and an overall improvement
in the world economy, an analyst says.
British energy giant BP Plc's head of energy analysis Michael
Smith said there was a very low capacity of oil producers to meet
current demand.
"It's quite difficult to increase capacity in the short term,"
he said after presenting the company's annual statistical review
on world energy here on Monday.
Oil prices surged to a fresh record high on Monday as New
York's main contract, light sweet crude for delivery in August
approached $61 in New York on heightened supply worries.
In London, the price of Brent North Sea crude oil for delivery
in the same month jumped to $59.10 per barrel. Brent prices have
steadily climbed from $30 early last year to $40 six months later
and broke new ground at $50 in October 2004.
"(Oil) consumption is growing by between 1.5 million and two
million barrels a day (this year)," said Smith. "There's a lot of
pressure. I won't be surprised to see oil (at between) $50 and
$60 throughout the year."
In 2004, global oil consumption rose by 2.5 million barrels a
day (bpd) or 3.4 percent, the fastest rate of growth since 1978.
China alone, zooming past other countries with an economy growth
of 9.5 percent, was responsible for 900,000 bpd of this increase.
In this year's first semester, growth in China's oil demand
seemed to abate, said Smith, as capital investment eased,
especially in industries that required abundant energy.
But with the coming colder seasons in the second half, demand
from China would be quite strong, he added.
Current soaring oil prices are actually not the highest in
value ever traded in history. The world saw oil at $35 in early
1980s, which if converted into today's terms is equal to $82.
Smith said it would be impossible to predict whether the
fossil fuel would reach such levels this year.
"If you saw a supply disruption like (previously) in Venezuela
and Iraq, you'd see prices going to that kind of level," he said.
"But if we don't have a supply disruption and the economy
slows down, you'll see prices coming off a bit," he added.