No letup seen in crude oil prices
By Tom Stundza -- Purchasing, 4/4/2007 4:45:00 PM
Even with the Iranian pardon and release of 15 British detainees, global petroleum prices are remaining elevated because of weak inventories, strong demand and concerns about a long-term supply crunch.
That’s why analyst Jeff Rubin, chief economist with CIBC World Markets in Toronto, sees a looming tightness in oil and natural gas supplies across North America. The world price of crude oil will rise to around $75 per barrel by the end of the fourth quarter. That would be the highest monthly average this decade and would create an annual average price close to $70.
Rising demand for oil from energy-hungry Asia and a rebounding U.S. economy could meet a supply squeeze later this year, Rubin says in the latest CIBC Canadian Portfolio Strategy Outlook published April 3. Civil unrest in oil-rich Nigeria has already shut in about 400,000 barrels of crude a day, adding to concerns about political unrest in the Middle East disrupting supply.
Also, U.S. tropical weather specialists are predicting significant hurricane activity in the U.S. Gulf of Mexico, which could put almost 1.5-million barrels per day of crude oil production and 10 billion cubic feet per day of natural gas production at risk. Two years ago, 90% of natural gas supply from the U.S. Gulf region was shut down for months after hurricanes ravaged offshore and onshore production sites. That’s why Rubin has pegged mid-2007 natural gas prices as between $7.50 per million British thermal units and $8 per million BTUs this year, rising to $9-to-$9.50 per million BTUs in 2008.
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