Oil prices likely to dip – but not far

World oil prices will continue to fall, BP’s chief economist Peter Davies believes, but probably not back to the levels prevailing earlier in the decade.

“We expect prices to stay over US$40 a barrel for the next three or four years at least,” said Davies, in Wellington for an international energy economists conference.

He readily acknowledges that like his peers he failed to predict the jump in the oil price between 2004 and 2006 when it rose from around US$27 to a peak of US$78 last August. It was US$58 yesterday.

The downward influences on prices had the upper hand at the moment, he said, but only up to a point.

One was global spare capacity – the extent to which producers can quickly ramp up production.

The New Zealand Herald