Oil to remain above $81 despite slowdown in US

Oil will climb to a record average above $81 this year, a poll showed yesterday, as analysts believe strong Chinese and Middle East demand will offset any slowdown from top energy consumer the US. The monthly survey of 33 analysts put the consensus forecast for US crude futures this year at an average of $81.33 a barrel, up $3.71 from last month’s poll. The average price for oil last year was $72.30. Oil’s six-year rally, which has seen prices surge above $100 earlier this month, has largely been fuelled by booming economies in China, India and the Middle East. Analysts said they do not see any evidence of this demand waning despite concerns of a global economic slowdown led by the US. “Even if there is reduced economic growth in the US, demand remains strong in other countries as there are no other real substitutes to oil right now,” said Belgian-Dutch financial group Fortis senior commodity analyst Helios Padilla-Mayer.
US crude prices have fallen to around $90 a barrel from the record peak of $100.09 reached on January 3, as traders fear a possible US recession will cut fuel consumption.

But analysts believe a weak dollar, political tensions in the Middle East and tight supplies from Organisation of the Petroleum Exporting Countries (Opec) will keep prices near current levels.

“Opec member countries have become dependent on the soaring oil revenues of recent years and are likely to seek to defend them in the face of a weakening global economy by cutting production to maintain prices,” said the Centre for Global Energy Studies in its monthly report.

Gulf Daily News