World oil prices to remain high in 2008 – analysts

Oil prices of near $100 per barrel caused alarm in consuming countries in 2007 and analysts see another tense crude market next year with triple-figure records a real prospect.

Despite a murky outlook for the world economy, crude prices are seen settling at elevated levels, spelling more pain for consumers and a steady flow of petrodollars for the world’s oil exporters.
From a low point of just below $50 per barrel in January, prices doubled in 2007, hitting $99.29 a barrel on November 21, an all-time record.

Oil forecasting is a notoriously difficult business, but few had expected such a run-up – apart from an analyst at investment bank Goldman Sachs who has achieved some fame for foreseeing early in 2005 a “super spike” in prices to $105.

“People at the beginning of this year would never have dreamt that prices would have reached such exalted heights,” said a London-based analyst for the Center for Global Energy Studies (CGES), Leo Drollas.

Goldman Sachs, one of the most active banks in the energy market, raised its price forecasts for 2008 by $10 on December 12, with average benchmark US prices now seen at $95.

The price could reach $105 by the end of 2008, it said. The CGES sees an average of about $90 in the first half of the year and Drollas said a spike to $100 was possible, above all if a cold northern hemisphere winter increased heating fuel demand.

Daily Star