Oil prices to top $60 by autumn, analysts warn
Heather Stewart, economics correspondent
Sunday May 22, 2005
The Observer
observer.guardian.co.uk
Oil prices will surge through $60 a barrel by the end of the summer, delivering a fresh shock to the global economy at the height of the US 'driving season', analysts warn.
Federal Reserve Chairman Alan Greenspan attempted to reassure the oil markets on Friday, saying rising stocks had helped to calm the 'price frenzy' that took the cost of crude to record highs earlier in the year.
But Paul Horsnell of Barclays Capital said the $10 price decline over the past month had been a temporary respite, and the market was about to 'tighten significantly', pushing the average price of a barrel of crude above $60 in the third quarter of 2005.
He said that the Chinese economy sucked in a record 3 million barrels of oil a day in April, up more than a fifth on the same month last year, while a production squeeze in Russia means that even with Opec producers turning on the taps, supply could struggle to keep up with demand.
'Russia's rate of production has slowed down considerably,' said Kona Haque, senior commodities editor at the Economist Intelligence Unit. 'I wouldn't be surprised to see further upward spikes.'
That would be painful for US motorists, who traditionally hit the freeways in their gas-guzzlers in the summer months. President George Bush urged Saudi Crown Prince Abdullah at a recent meeting in Texas to take action to bring down the oil price: but analysts believe the Gulf state has little capacity to spare.
Global finance ministers warned in Washington last month that sky-high oil prices were acting as a 'headwind' against world growth, which was already expected to slow in 2005.
Julian Lee, of the Centre for Global Energy Studies, said Opec's behaviour would be crucial. 'Much is going to depend on how Opec responds to the easing of prices that we have seen over the past few weeks,' he said. |
