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Author Topic: Crude Oil: Will it hit $225 ?  (Read 2076 times)

Offline gkunalin

Crude Oil: Will it hit $225 ?
« on: May 08, 2008, 04:58 AM »
Crude Oil: Will it hit $225?

Crude Oil is going high and high. According to a new report, crude oil will go through the roof by 2010.

According to CIBC World Markets, tighter supplies will drive crude oil over US$150 a barrel by 2010 and to US$225 a barrel in four years.

CIBC World Markets Chief Economist Jeff Rubin - one of the first to predict $100-a-barrel oil, which he did three years ago - updated a forecast he issued in January saying oil would hit US$150 a barrel within four years, raising that projected price by US$75.

Rubin said his group has ?re-examined our projected supply increases? to discount expected rises in production of natural gas liquids, which he said account for virtually all the growth in global petroleum liquids production since 2005.

Gas liquids, ?while valuable hydrocarbons, are not a viable substitute for oil and cannot be economically used as a feedstock for gasoline, diesel or jet fuel,? the new report says.

?Stripping out natural gas liquids, oil production has not grown for over two years, which certainly goes a long way to explaining why oil prices have doubled over that period,? Rubin said.

?Whether we have already seen the peak in world oil production remains to be seen, but it is increasingly clear that the outlook for oil supply signals a period of unprecedented scarcity.?

At Scotiabank, the overall commodity index has climbed 181.2% from its cyclical low in October 2001 - a stronger advance than the surge between 1972 and mid-1978. The Bank of Nova Scotia's commodity price index jumped by 5% during March to its third record high in as many months.

That report shows that rising energy costs - caused in part by soaring demand for oil from Asia and worries about supply reductions - will continue to drag down the economy.

?The oil and gas index soared by 11.8% in March, climbing above its previous peak in October 2005, and will rise further in April,? said Scotiabank economist Patricia Mohr.

Oil and mineral prices posted new highs in March, and crude oil has continued booming to a record of US$119.90 per barrel Tuesday on the New York Mercantile Exchange. On Thursday, crude prices hovered around $115.

?Recent news that Russian oil production dropped by 0.9% in the first quarter of 2008, the first year-over-year decline in a decade, set off another wave of concern over supplies to meet growing emerging-market demand,? Mohr said.

National average gasoline prices, now about C$1.23 a litre, will top C$1.40 a litre this summer and C$2.25 by 2012, according to the report.
 
 

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