Fu­tures mar­kets put oil at $142 a bar­rel in eight years

The Weekend Australian - Travel - - Resources -

SIL prices are head­ing to more than $142 a bar­rel in the next eight years, ac­cord­ing to fu­tures con­tracts on the New York Mer­can­tile Ex­change, fed on con­cern that growth in sup­ply may fail to keep pace with ris­ing de­mand.

Oil for de­liv­ery in De­cem­ber 2016 surged $20.79, or 17 per cent, in the days af­ter Gold­man Sachs Group, the world’s big­gest se­cu­ri­ties firm by mar­ket value, fore­cast oil would av­er­age $141 in the sec­ond half of 2008 in view of con­straints in pro­duc­tion and a lack of sub­sti­tutes. Crude for July 2008 climbed 7.5 per cent in the same pe­riod.

The gain, more than dou­ble the in­crease in oil for de­liv­ery this US sum­mer, ‘‘ fits in’’ with the Gold­man fore­cast which ‘‘ talked re­cently about long-dated crude in par­tic­u­lar,’’ said Tim Evans, an en­ergy an­a­lyst for Citi Fu­tures Per­spec­tive in New York.

Oil gi­ants such as Exxon Mo­bil, Royal Dutch Shell, BP, Chevron, To­tal SA and Cono­coPhillips will spend a record $98.7 bil­lion this year on ex­plo­ration and pro­duc­tion, more than quadru­ple the amount eight years ago. Sup­plies from non-OPEC coun­tries will only meet about 20 per cent of world de­mand growth over the next four years.

Ear­lier this month, UBS AG fore­cast that Brent crude oil, a bench­mark for two-thirds of global sup­plies, would rise to $200 a bar­rel by 2015. The in­crease re­sults from de­mand out­pac­ing spare sup­ply ca­pac­ity some­time in 2013 to 2015, ac­cord­ing to UBS econ­o­mist Jan Stu­art.

The strug­gle to find oil co­in­cides with a boom in de­mand from places such as China and the Mid­dle East, where it will rise 4.9 per cent this year, mak­ing up for a drop in de­mand from North Amer­ica and Europe, the In­ter­na­tional En­ergy Agency said in a re­cent re­port.

It cut its fore­cast for global de­mand for a fourth month.

A Saudi Ara­bian de­ci­sion last week to in­crease crude oil out­put uni­lat­er­ally in June may not lower prices be­cause spec­u­la­tors are driv­ing the rally, not a sup­ply short­age, Shokri Ghanem, the chair­man of Libya’s Na­tional Oil Cor­po­ra­tion, and Iraqi Oil Min­is­ter Hussain al-Shahris­tani said ear­lier this week.

JA­PAN, the world’s third-largest oil con­sumer, in­creased crude oil im­ports 10 per cent last month even as crude prices surged to record lev­els. Ja­pan im­ported 21.3 mil­lion kilo­litres, about 4.3 mil­lion bar­rels a day. Bloomberg

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