Crude to stay near $50/bbl, boosting lube demand – consultant

Barbara Ortner

19-Feb-2015

LONDON (ICIS)–Crude prices will be not much above $50/bbl for the next three to six months and this will create a very positive trend in global lubes demand, a consultant said on Thursday.

Crude oil prices could be even lower than $50/bbl in the coming months, said Jaap Kalkman, partner at consultants Arthur D Little. He was speaking at the 19th ICIS World Base Oils and Lubricants Conference in London.

“OPEC, unless it gets disciplined, will keep producing. So the price setter for the next two to three years will be North American shale, so the price for 2015 will be $55-70/bbl,” he said.

“Geopolitical events do not matter anymore. Only geophysical events matter, like shale oil,” he said.

“Everyone who is experiencing these lower oil prices will drive a lot more kilometres. Plus they will be buying more new cars … so this will create more lubes demand,” he added.

Another factor adding to greater lubes demand would be drivers switching from public transport to more private transport, he added.

Breaking it down by region, he said that for North American demand, the effect would be neutral because of the job losses in oil exploration and production.

However, Europe would experience a “perfect storm”, with lower oil prices and the weak currency boosting exports and industry, leading to the “rebirth of Europe”.

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