Surging Energy Demand Oil Price Could Hit $200, Says German Institute
Wednesday's record oil price of $100 per barrel of crude marks a long-term upward trend which could see oil prices reach $150 in five years and $200 in 10 years, says one of Germany's leading economic institutes.
Oil wells in China's Shengli oil field.
"Oil supplies are becoming increasingly scarce and that will continue to drive up prices," Claudia Kemfert, the energy expert of the DIW German Institute for Economic Research, told Berliner Zeitung newspaper.
She said the most recent surge in oil prices which drove the price ber barrel to over $100 on Wednesday was due to speculative buying. "The share of the oil price attributable to speculation is likely to be around 20 percent," she said, adding that the price was likely to reach $105 in the coming weeks.
The surge in crude oil to a record of $100 in trading on Wednesday shocked Wall Street on the first day of trading in 2008. In 2007 the price of oil jumped 57 percent due to the weak dollar, worries about oil reserves and world political turbulence, said Kemfert.
The DIW and other experts don't expect the oil market to calm down anytime soon. "We find it difficult to contemplate any scenario which doesnt see annual average prices going steadily higher," said Kevin Norrish, an analyst at Barclays Capital.
The immediate cause for this week's rise in oil prices was a US Energy Information Administration report due out Thursday. It is expected to show a drop in US crude inventories, which would be the seventh consecutive weekly decline. Violence in Nigeria and port closures in Mexico resulting from bad weather likewise have oil traders nervous.