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Oil prices may see 'super spike'
London's Brent crude, meanwhile, climbed 72 cents to $55.01 a barrel. Consumption effect Prices are now approaching the record high of $57.60 seen in the middle of March. This peak prompted Opec to lift production quotas by 500,000 barrels a day. In its report, Goldman Sachs said the possibility of political turmoil in major oil producers such as Saudi Arabia could lead to a significant rise in prices over the long-term. The fundamental situation is not nearly as bad as what current oil prices would suggest The firm has raised its US price forecasts for 2005 and 2006 to $50 and $55 a barrel from $41 and $40 respectively. "Oil markets may have entered the early stages of what we have referred to as a 'super spike' period," said Goldman Sachs analyst Arjun Murti. This would result in "a multi-year trading band of oil prices high enough to meaningfully reduce energy consumption and recreate a spare capacity cushion only after which will lower prices return". Tight supply Prices have remained above $55 a barrel in recent days after data showed that US gasoline stocks fell last week while demand was 2% higher than this time last year. Markets are also nervous about disruptions to supply after the recent fatal explosion at BP's largest refinery in the United States and a power failure which caused the closure of a Venezuelan refinery on Thursday. However, other analysts said it would require a major disruption in supply to cause a spike in prices of such magnitude. "The market is still of the mind that supply/demand is still very tight but the fundamental situation is not nearly as bad as what current oil prices would suggest," David de Garis, senior economist at ANZ Investment Bank, told Reuters. Enter recipient's e-mail: |
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