Lehman analysis says oil will rise, deflates ‘bubble’ theory

Crude oil will average $60 a barrel in the first quarter of this year and is poised to rise through 2008 on higher demand in the US and China, Lehman Brothers Holdings Inc said.
World oil consumption will rise by at least 1.7mn bpd this year, led by China, according to Edward Morse, Lehman’s New York-based chief energy economist. Signs of an economic slowdown in the US, the world’s largest energy consumer, haven’t trimmed “robust” use of fuel, he said.
The US gross domestic product expanded at an annual pace of 2.2% last quarter, compared with 3.5% reported on January 31, the government said this week.
US thirst for gasoline, which typically grows 1.5% to 2% a year, has not been slaked. Motorists used 3.6% more fuel in the four weeks ended February 23 than a year ago, according to the Energy Department.
US motor fuel consumption “is growing at a level that is totally inconsistent with the GDP numbers,” Morse said in a phone interview while traveling in Dubai on Thursday.
China’s share of global oil consumption has risen from 3.5% in 1990 to about 8.2% in 2006, William Poole, president of the Federal Reserve Bank of St Louis, said in an interview on Friday.

Gulf Times