27 January 2005 19:38 [Source: ICIS news]
LONDON (CNI)--Oil prices will remain high in 2005 and probably into 2006, delegates to the Chemical Industries Association (CIA) Business Issues conference were warned on Thursday.
With inventory cover at "rock bottom", consultant Leo Drollas of the Centre for Global Energy Studies (CGES), said he expected prices to remain above $40 a barrel.
CGES oil price scenarios are for 2005 annual average prices ranging from between $35/bbl to $46/bbl with the room for spikes in between. The probability of oil prices being on the upside of these numbers was relatively high, Drollas indicated.
Drollas noted that leading global oil producer Saudi Arabia is likely to seek oil prices in the $35-$38/bbl range if it expects to retire debt at the rate of 2004 and maintain the economy.
He suggested that, longer term, oil prices would ease provided producers install the extraction capacity they say they will.
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