Oil at $120-130/bbl for rest of year, EIA says

20 August 2008 23:27  [Source: ICIS news]

HOUSTON (ICIS news)--The Energy Information Administration (EIA) said on Wednesday that it thinks crude oil prices may settle in the $120-$130/bbl range for most of the remainder of the year, barring any additional major supply disruptions from hurricanes or geopolitical events.

The EIA said in its weekly commentary that it projected year-over-year declines in US oil consumption will not be as steep in the second half of the year, in part due to relatively weak consumption in the second half of last year and also to the perceived end of the upward surge in prices.

The government agency said balancing out the forecasted decreases in US consumption; it projects relatively strong continued demand growth in non-OECD countries.

In addition, EIA said that as crude and gas prices drop, Saudi Arabia may cut back on its recent increase in production, which could halt the most recent price decline.

“Of course, whether or not this scenario unfolds is anyone’s guess, but understanding the factors behind the increase and recent decline in oil prices is important in understanding what might come next in the prices we pay at the pump,” said the EIA.

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