Thursday 7 April 2011

Oil at $100 per barrel could be floor price not peak

Oil prices at $100 per barrel could soon be seen as a floor price, rather than the peak, claims a leading analyst.

Andrew Hill, Head of Analytics and Publications at EnergyQuote JHA made the claims in a new report he has written.

Entitled The New High Energy Price Reality, the report claims, that with supply growth struggling to keep pace with demand growth, significant upward pressure remains on oil prices. A combination of rising production costs and decreasing spare production capacity means that $100 oil is now very much more likely to represent a floor level rather than a peak, says the report.

Another extract from the report adds that with a price rise almost inevitable, energy users should act to cushion the blow. It states: "The key question is not whether energy prices will rise or not, this is all but a foregone conclusion. Instead the focus should be on how industrial energy buyers can best mitigate the impact of these rises."

EnergyQuote JHA and IHS CERA released their assessment of the outlook for energy prices at their 10th biannual European Energy Price Forecasting Conference.