Statoil Sees Structural Upward Shift In Oil Prices
Friday, 23 March 2012 | 11:00
Norwegian oil giant Statoil ASA (STO) expects oil prices to stay high, due to increasing demand from emerging economies, resource scarcity, and the complexity of new resources coming on stream.
Markets and expectations suggest a structural shift in oil prices, according to Statoil's chief economist Klaus Mohn, suggesting that higher prices are here to stay.
"Issues related to resource scarcity and the complexity of reserves will push marginal costs upwards in the long term," said Mohn at a conference about oil price forecasting in Oslo, Norway, arranged by Norges Bank.
Mohn said the Organization of the Petroleum Producing Countries spare capacity is a key variable for the oil market. The U.S. Department of Energy has projected spare capacity at about 3 million barrels per day in 2012, he added.
However, "based on the latest development, we think it's a bit lower than that, [although] we think the market will be less tight in a couple of years," Mohn said. Higher prices have also brought forward new technology and more supply, he said.
"We should expect more to come, both in terms of demand, supply and technological development," he said.
Statoil is foreseeing a gradual decrease in oil demand in industrial countries, "but that is more than offset by the demand from emerging economies."
Statoil expects oil demand to peak at about 100 million barrels a day around 2025, with demand staying at a plateau until 2040.
Oil supply will eventually peak, but there is no reason to panic, he added, as production tends to increase due to technological progress and the opening of new provinces.
"The developments in the U.S. have the potential to move to the rest of the world," said Mohn, pointing to resources such as shale oil. But this will take some time, and "over the next ten years or so, production will be concentrated in the U.S."
Source: Dow Jones