Oil prices will not fall much lower and will rebound to $80 a barrel by 2011 as a recovery in the world economy begins by the end of next year, according to Deutsche Bank’s chief energy economist.
Adam Sieminski said at a Houston conference that oil prices could dip further, perhaps even to $30, but they would not remain there.
He predicted crude oil would average $47.50 a barrel in 2009, $55 in 2010 and then about $80 a barrel in 2011 as global economic growth, after falling to almost zero in next year, would rebound to 2.6% in 2010 and continue on a positive path.
As a result of the global economic crisis more than $100 has been sliced off the cost of a barrel of oil since July as demand has weakened. Mr Sieminski said that although Deutsche Bank expected worldwide oil demand to fall by 2% – or 1.8million barrels a day (bpd) – next year, world supply of oil and gas would become an issue again when the economy recovered.
Oil prices at about $80 were required to sustain investment, he added.
The boss of French energy major Total has said that the oil-producing countries’ cartel Opec must take firm action at its meeting on Wednesday to avoid a further fall in oil prices that would give pain to its own members.
Total chief executive Christophe de Margerie said Opec should send out a clear message or prices would continue to fall.
He said that a gentle rise to $80-$90 a barrel would encourage more investment in marginal exploration projects, but added that the oil industry was heading for a downturn following a spate of record profits.
Mr de Margerie said that oil company cash flows would fall and profits would be reduced.
He added that low prices could deter investments that would eventually be needed when the global economy recovered.