Oil prices would exceed US$100 in 2010.
September 14th, 2009 by ALVIN SOONG
THE price of crude could rise beyond US$100 by the second half of next year, according to Straits Times, by Mr Dominick Chirichella, co-founder of the Energy Management Institute, a commodity education and research company. After hitting peaks of US$147 in July last year, crude oil prices fell to near five-year lows below US$33 in December before making a rebound. Since May, oil has hovered between US$60 and US$75. It closed at US$69.29 on Friday, a rise of some 76 per cent from February’s price levels. Amid mixed views among industry experts over the future of the commodity’s price, Mr Chirichella expects crude oil prices to hover between US$60 to US$70 per barrel for the rest of this year, and to rise into the US$75 to US$100 range next year.
This is mainly because the world’s appetite for oil will increase when it bounces back from the current economic crisis, he said. In particular, the emerging economies (China, Singapore, South Korea, Thailand, Brazil and the Middle East countries) will lead this demand surge. China, in particular, with its massive infrastructure projects and record demand for vehicles, looks set to increase its current 10 per cent share of world petroleum consumption.
‘If China had the same per capita consumption as the United States, it would need 85 million barrels per day. This is as much as the world consumes today,’ said Mr Chirichella, speaking at an energy seminar organised by the International Trading Institute at the Singapore Management University. The weakening greenback may also prove to be a boost for commodities like oil. Since February, the US dollar has slid by 8 per cent against the Singapore dollar and 12 per cent against the euro.
He added that if global equity markets continue to grow, investors may move away from ’safe havens’ like the dollar into commodities.
With such factors in play, Mr Chirichella expects oil prices at the end of the year to show gains when compared to the end of last year. ‘We will see US$100 per barrel prices before we see US$50 per barrel,’ he said.
Summarised from Straits Times 14th Sept 2009
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