Global oil prices have more than doubled from around US$30 in 2003, and analysts say the forces pushing up prices show no signs of easing, with US$100-a-barrel oil a possibility next year.
Oil prices have been hovering around US$80 a barrel in recent weeks after hitting all-time highs in New York and London. Tight supplies, geopolitical worries, storms and strong global economic growth have all contributed to high prices.
"The two arguments against 100-dollar oil, the ability of technology to raise new supply and the ability of prices to limit demand, are falling quickly by the wayside," said Jeffrey Rubin, an economist at CIBC World Markets.
"Gone are Big Oil's smug assurances that their technical prowess will untap huge hitherto undiscovered reserves of cheap crude. What we hear instead through the voice of the US National Petroleum Council are warnings of depletion and steadily rising prices," he said.
Some analysts are surprised that prices keep going up despite the conventional wisdom that high prices will curb demand.
But Rubin said strong growth in China and other developing nations has taken up any slack in demand from the wealthier nations.
"Why haven't soaring prices shackled demand? They actually have in some places like the carbon conscious economies of western Europe," he said.
"But such reductions have become a footnote to the world demand curve, which is no longer shaped by energy consumers in the [industrialized] economies, but by the seemingly insatiable appetite of newly empowered consumers in developing countries whose economies are industrializing at breakneck speeds."
A CIBC report notes that China consumes more than double its daily production of 3.5 million barrels, while other fast-growing Asian nations like India, Malaysia and Thailand are also boosting petroleum use.
Producers like Russia and China have failed to fill the gap and Iraq, once a major producer, has been slow to increase production, the report noted.
Ben Tsocanos, an analyst at Standard & Poor's, said markets remain concerned about a political crisis in key oil producing nations like Iran which borders war-torn Iraq.
"If there were a real political crisis, like in Iran or any supply disruption, the oil market turns vulnerable to disruption or fear of disruption," he said. "So it is possible to hit 100 dollars next year."
Traders appear to have cast aside concerns that high prices will lead to global recession, and some analysts say the Organization of the Petroleum Exporting Countries has done little to bring prices down.
"It seems like the world is willing to pay more money for oil, it does not seem like it is slowing down growth," Tsocanos said. "OPEC does not have really a lot of capacities and so they could not increase production if they wanted to."
Bart Melek at BMO Capital Markets said price pressures are not receding.
"We can certainly go over 90 dollars next year," he said.
TYPHOON: The storm’s path indicates a high possibility of Krathon making landfall in Pingtung County, depending on when the storm turns north, the CWA said Typhoon Krathon is strengthening and is more likely to make landfall in Taiwan, the Central Weather Administration (CWA) said in a forecast released yesterday afternoon. As of 2pm yesterday, the CWA’s updated sea warning for Krathon showed that the storm was about 430km southeast of Oluanpi (鵝鑾鼻), Taiwan’s southernmost point. It was moving in west-northwest at 9kph, with maximum sustained winds of 119kph and gusts of up to 155kph, CWA data showed. Krathon is expected to move further west before turning north tomorrow, CWA forecaster Wu Wan-hua (伍婉華) said. The CWA’s latest forecast and other countries’ projections of the storm’s path indicate a higher
SLOW-MOVING STORM: The typhoon has started moving north, but at a very slow pace, adding uncertainty to the extent of its impact on the nation Work and classes have been canceled across the nation today because of Typhoon Krathon, with residents in the south advised to brace for winds that could reach force 17 on the Beaufort scale as the Central Weather Administration (CWA) forecast that the storm would make landfall there. Force 17 wind with speeds of 56.1 to 61.2 meters per second, the highest number on the Beaufort scale, rarely occur and could cause serious damage. Krathon could be the second typhoon to land in southwestern Taiwan, following typhoon Elsie in 1996, CWA records showed. As of 8pm yesterday, the typhoon’s center was 180km
TYPHOON DAY: Taitung, Pingtung, Tainan, Chiayi, Hualien and Kaohsiung canceled work and classes today. The storm is to start moving north this afternoon The outer rim of Typhoon Krathon made landfall in Taitung County and the Hengchun Peninsula (恆春半島) at about noon yesterday, the Central Weather Administration (CWA) said, adding that the eye of the storm was expected to hit land tomorrow. The CWA at 2:30pm yesterday issued a land alert for Krathon after issuing a sea alert on Sunday. It also expanded the scope of the sea alert to include waters north of Taiwan Strait, in addition to its south, from the Bashi Channel to the Pratas Islands (Dongsha Islands, 東沙群島). As of 6pm yesterday, the typhoon’s center was 160km south of
STILL DANGEROUS: The typhoon was expected to weaken, but it would still maintain its structure, with high winds and heavy rain, the weather agency said One person had died amid heavy winds and rain brought by Typhoon Krathon, while 70 were injured and two people were unaccounted for, the Central Emergency Operation Center said yesterday, while work and classes have been canceled nationwide today for the second day. The Hualien County Fire Department said that a man in his 70s had fallen to his death at about 11am on Tuesday while trimming a tree at his home in Shoufeng Township (壽豐). Meanwhile, the Yunlin County Fire Department received a report of a person falling into the sea at about 1pm on Tuesday, but had to suspend search-and-rescue
RSS