Oil prices risk new rises on supply shocks: Experts
Monday, 11 August 2008
LONDON, Aug 10 (AFP): World oil prices, which have plunged from recent record heights, could spike higher again should the market be rocked by new supply-side shocks, according to industry experts.
Prices sank lower last week on mounting concern that slower economic growth in the United States would translate into lower global energy demand.
The price of crude oil on international markets has shed about 20 per cent in value since hitting record highs above 147 dollars per barrel in July.
Standard Chartered analyst Helen Henton said investors could send oil surging higher once more amid volatile trading conditions-and ongoing supply threats such as the Iranian nuclear energy crisis.
"Overall, the picture is one of a still tight market with growing demand, vulnerable to supply risks," Henton said.
She added: "Upside risks remain. We... expect prices to range in a 110-130 dollar band for the next 18 months, while not ruling out investor-driven price spikes."
Meanwhile, a bullish report has predicted that oil could strike 200 dollars per barrel within ten years owing to tightening supplies and a lack of investment in new production.
However, other oil industry experts remain unconvinced about a return to record-breaking price levels.
Julian Jessop, at Capital Economics, believes the world will now face a sustained period of lower prices for oil and other commodities amid slowing economic growth in Western economies.
He added: "The global demand environment is clearly much weaker. The OECD (Organisation for Economic Cooperation and Development) economies grew by just over three per cent in 2006, but many are now flirting with outright recession."
But Henton countered that strong demand stemmed from countries that were not within the region of the OECD.
Jessop said that "ever-accelerating demand for commodities from emerging economies" could not be taken for granted.
He warned: "The trend among Asian countries towards cutting fuel subsidies will increase the sensitivity of demand to higher global oil prices by ensuring that final consumers bear more of the cost."
Prices sank lower last week on mounting concern that slower economic growth in the United States would translate into lower global energy demand.
The price of crude oil on international markets has shed about 20 per cent in value since hitting record highs above 147 dollars per barrel in July.
Standard Chartered analyst Helen Henton said investors could send oil surging higher once more amid volatile trading conditions-and ongoing supply threats such as the Iranian nuclear energy crisis.
"Overall, the picture is one of a still tight market with growing demand, vulnerable to supply risks," Henton said.
She added: "Upside risks remain. We... expect prices to range in a 110-130 dollar band for the next 18 months, while not ruling out investor-driven price spikes."
Meanwhile, a bullish report has predicted that oil could strike 200 dollars per barrel within ten years owing to tightening supplies and a lack of investment in new production.
However, other oil industry experts remain unconvinced about a return to record-breaking price levels.
Julian Jessop, at Capital Economics, believes the world will now face a sustained period of lower prices for oil and other commodities amid slowing economic growth in Western economies.
He added: "The global demand environment is clearly much weaker. The OECD (Organisation for Economic Cooperation and Development) economies grew by just over three per cent in 2006, but many are now flirting with outright recession."
But Henton countered that strong demand stemmed from countries that were not within the region of the OECD.
Jessop said that "ever-accelerating demand for commodities from emerging economies" could not be taken for granted.
He warned: "The trend among Asian countries towards cutting fuel subsidies will increase the sensitivity of demand to higher global oil prices by ensuring that final consumers bear more of the cost."