Oil floor price about $90/bbl - FirstEnergy analyst


Scant spare production capacity among OPEC members and rising demand in developing countries mean crude is unlikely to dip below $90 a barrel and could run up to $150, an analyst said on Thursday.

There is little chance of new supplies flooding world markets, so emerging economies -- where price subsidies and surging income from oil wealth are driving demand -- will keep supporting prices, FirstEnergy Capital Corp analyst Martin King said. King also predicted US natural gas will average nearly $9.75 per million British thermal units this year, up 37% from 2007, as the rush to refill inventories more than makes up for the weak US economy.

The US Energy Information Administration reported on Thursday that inventories in the United States are 16% below last year’s levels and 3% under the five-year average. King predicts West Texas Intermediate crude to average $96 a barrel in 2008, up a third from last year. Prices have recently run up to a record near $120 a barrel. “I certainly think it’s possible that you could support valuations on $100 or better on crude, given the way the market’s shaping up this year and next year with just the capacity constraints in the system,” the Calgary-based analyst told reporters after giving his forecast to an industry audience.

The combination of a weak US currency, geopolitical tension and investment fund flows could be adding as much as $25 to the price of a barrel of oil beyond the fundamentals of supply and demand, King said. “Certainly OPEC would be getting more nervous if it started drifting down to the low $90s again, and they’ve said repeatedly: ‘We don’t want to put more supply in the system -- it looks well-supplied,’” he said. Based on historical data about demand during rising prices, oil could climb into the $130 to $150 a barrel range, he said. North American natural gas markets will be driven this year by the need to refill Canadian and US storage facilities drained by heating demand due to the cold winter, amid declining production, King said. He predicted Canadian spot gas at the AECO storage hub will average C$9.01 per thousand cubic feet, up 40% from last year.

Despite the recent recovery in gas pricing, companies may not ramp up their drilling plans until next year. “A lot of the spendings already been done for the first half, and I guess it depends on how brave people are, how big believers they are, or if they still want to play conservative until the end of this year,” King said. “Activity will increase but I don’t think we’ll hit the same kind of highs that we saw at the end of ‘05 and early ‘06.” (Reuters)

Last Gábor Baross Scheme Top-up Contracts Signed  Figures

Last Gábor Baross Scheme Top-up Contracts Signed 

Hungary Ready to Act as Intermediary With Russia - Szijjártó Int’l Relations

Hungary Ready to Act as Intermediary With Russia - Szijjártó

Continental Veszprém Plant Manager Looks to Transform Challe... Interview

Continental Veszprém Plant Manager Looks to Transform Challe...

Summer Camp Prices Have Increased 10-15% Tourism

Summer Camp Prices Have Increased 10-15%


Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.