Commodity Strategists: Oil Prices May Fall 9% in ‘07

U.S. crude oil prices may fall as much as 9 percent next year as global supply rebounds, outpacing growth in demand, CFC Seymour Ltd. said.

West Texas Intermediate, the U.S. benchmark crude variety, may average $62-$63 a barrel next year, down from a forecast average of $67-$68 this year, CFC Seymour said in a presentation. Supply may increase by about 3 percent next year, double the rate of demand growth, said Dariusz Kowalczyk, chief investment strategist at the Hong Kong-based securities firm.
“In 2007, the supply of crude will exceed demand, growth in demand will not match growth in supply,” Kowalczyk said in an interview. “The main reason is non-OPEC production will increase next year. African output will go up 12 percent in 2007 and the IEA has said Latin America and Russian output will also increase.”

The IEA this month cut its forecast for China’s oil demand growth for 2006 and 2007 because of slower gains in the use of transport fuel. China’s oil demand may rise 6.2 percent this year, and 5.4 percent next year, it said. World oil demand this year will average 84.49 million barrels a day, rising to 85.94 million in 2007, it said.

Bloomberg