Singapore: Crude oil may rise to between $150 and $200 a barrel within two years as growth in supply fails to keep pace with increased demand from developing nations, Goldman Sachs Group analysts led by Arjun N Murti said in a report.
New York-based Murti first wrote of a "super spike" in March 2005, when he said oil prices could range between $50 and $105 a barrel through 2009. The price of crude traded in New York averaged $56.71 in 2005, $66.23 in 2006 and $72.36 in 2007. Oil rose to an intraday record $122.47 yesterday on speculation demand will rise during the peak US summer driving season.
"The possibility of $150-$200 per barrel seems increasingly likely over the next six-24 months, although predicting the ultimate peak in oil prices as well as the remaining duration of the upcycle remains a major uncertainty," the Goldman analysts wrote in the report dated May 5.
A report on Monday showed US service industries expanded in April, signalling higher energy use. The Institute for Supply Management said its index of non-manufacturing businesses, which make up almost 90 per cent of the economy, grew for the first time since December. China is increasing refining capacity and boosting imports to meet rising demand for the Olympic Games.
US gasoline demand typically climbs going into the summer season when Americans take to the highways for vacations. The peak-consumption period lasts from the Memorial Day weekend in late May to Labour Day in early September.
Monthly fuel sales were the highest during August in five of the last six years, according to data from the Department of Energy.
China, the world's fastest-growing major economy, has more than doubled oil use since New York crude oil dropped to this decade's low of $16.70 a barrel on November 19, 2001. Record prices have failed to stem rising consumption in developing nations, with demand led by China, India and the Middle East.
Price forecasts for spot US benchmark West Texas Intermediate crude oil for 2008 to 2011 were revised higher by Goldman. The 2008 price estimate was raised to $108 a barrel from $96, the 2009 forecast to $110 from $105, and 2010 to 2011 estimates are projected at $120 from $110, the analysts said, citing slowing supply growth in Mexico and Russia, and low spare production capacity in Opec.
Oil has also rallied amid a dispute between the US and Iran regarding the Gulf oil producer's plan to develop nuclear energy.
In Nigeria, Africa's big-gest oil exporter, militants have attacked oil installations and kidnapped workers since the beginning of 2006, forcing Royal Dutch Shell to halt output.
In Venezuela, production has slumped to about 2.34 million barrels a day from almost three million barrels a day in 2002, according to Bloomberg's estimates, before President Hugo Chavez fired almost 20,000 workers who had closed the state oil company in an attempt to overthrow the government.