Kuwait OPEC Official: Oil to Remain at $70-80 Until '12
DUBAI (Zawya Dow Jones), Oct. 5, 2009
Organization of Petroleum Exporting Countries member Kuwait expects crude oil prices to remain between $70-80 a barrel until 2012 on slow global economic recovery, a Kuwaiti OPEC official said Monday.
"Prices will remain within the level ... between $70-80 for two reasons; one there will be enough supply to meet demand and demand levels will take time to reach previous normal levels," Mohamad Al Shatti, a Kuwaiti OPEC delegate and senior manager at state-run Kuwait Petroleum Corp., or KPC, told Zawya Dow Jones by phone.
Despite expectations that 2010 will be a better year for oil-producing economies than 2009, Shatti said it is difficult to say how much better and he doesn't foresee a return to price levels close to $150 a barrel as witnessed in July 2008 before 2016.
Crude prices fell below $40 late last year from record highs of $147 a barrel in July on concern over energy demand as major economies slipped into recession. In recent weeks, prices have continued to hover around the $70 a barrel mark amid expectations that energy demand will increase as world economic conditions are improving.
The front-month November light, sweet, crude contract on the New York Mercantile Exchange was trading $0.20 lower at $69.51 a barrel at 1030 GMT Monday.
"It will take time for things to normalize," Shatti said. "Demand will not normalize before 2012, it will take a few years - it's the usual cycle."
John Calverley, Standard Chartered Bank regional head of research North America, which forecasts oil will average $82 a barrel in 2010, said at a briefing in Dubai that oil prices may drop to $30-40 a barrel by 2015.
"Personally, I think prices will fall because what we are seeing is a huge amount of new investments in oil," Calverley said.
Shatti said he expected stocks to fall by January below their current 60-days average but added that present high stock levels weren't having a major impact on prices.
"Even though inventories are high prices are still at acceptable levels because of hope that the global economy and demand will go back to normal," he said, adding that despite positive signs in Asia the recovery is still very fragile.
"We have to be careful of high inventories and demand is staying normal, there is no indication we are out of the woods yet as there is still unemployment, people are still worried and consumer spending in the U.S. is still not back to global levels," he said.
Shatti said OPEC compliance had dropped to around 65-68% in September.
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