Chicago Board of Trade's Dan Says Oil May Rise to $75 a Barrel
Oct. 17 (Bloomberg) -- Crude oil prices, which rose to a record $55 a
barrel in New York on Friday, may increase further and peak at $75 a
barrel, said Bernard Dan, President of the Chicago Board of Trade,
the second-biggest U.S. futures market.
``Given that some production is going on around the world, I can't
see it much higher than $75 unless there are disruptions in supply
lines,'' Dan said on Publishing & Broadcasting Ltd.'s Nine Network's
Business Sunday program in Sydney. ''I think that the U.S. economy is
strong enough to absorb that.''
Crude oil for November delivery on Friday closed at $54.93 a barrel
on the New York Mercantile Exchange after reaching $55 during the
day, the highest since futures began in 1983. Oil in New York has
surged 26 percent in the past month.
Futures were boosted by comments from Federal Reserve Chairman Alan
Greenspan, who said oil isn't high enough to slow expansion as much
as in prior oil shocks. High oil prices helped push the U.S. economy
into recession in the 1970s and 80s, and caused demand to plunge by
19 percent between 1978 and 1983, according to the Energy Department.
While a rise to $75 sounded significant, the majority of oil traders
and consumers had ``priced in that sort of range and while it may do
some damage in terms of the economy and may be reflected in our
equity market, I don't think it's going to be at a level where it's
catastrophic,'' Dan told Business Sunday. It's clear though that
rising energy prices are creating concern in U.S. equity markets, he
said.
With limited global oil supplies, focus on renewable fuels will
increase, boosting the U.S. ethanol market, Dan said.
Ethanol
``It is a three billion gallon market today, it will be a five
billion gallon market in the next couple of years,'' the manager said
on the Australian television program. ``You will see a tremendous
push to reduce dependence on oil and that plays in the futures
markets because that creates opportunities for traders as well.''
The Chicago Board of Trade is a marketplace for futures including
futures tied to corn and wheat, precious metals and government bonds.
Futures are agreements to buy or sell assets at a set date and price,
and investors use them to bet on or guard against price fluctuations
in the underlying assets. The Chicago Board of Trade is a marketplace
for futures
Dan told reporters in Sydney on Oct. 15 he expects the Board of Trade
will convert to a shareholder-owned company, from one owned by its
members, early next year, prompting speculation it will sell shares
to the public or be bought by the bigger Chicago Mercantile Exchange. |
