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