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Oil expert predicts sharp fall in prices by March-end
Tuesday, 14 January 2003, 20:30 IST
NEW DELHI: Global oil prices currently hovering at a high $30 per barrel are expected to plunge to around $17 a barrel by March-end, a global energy expert said Sunday.
Jatlinder Kumar, president of the U.S.-based Economic and Technical Consultants (ETC), gave several reasons for this.
"Slower global demand, high strategic reserves of crude oil in the U.S, a gradual shift towards environment friendly natural gas, an all time high gas stock with some companies in America are some of the reasons that will see a sharp slump in global oil prices latest by March-end," he said as India's premier hydrocarbon meet Petrotech 2003 ended here.
In addition to the U.S. strategic reserves of crude oil for 90 days, maintained by the government at Georgia and Louisiana, the U.S navy maintains its own reserves at California.
Several major companies are also holding natural gas stocks of about 110 billion standard cubic feet in underground storages all over the U.S.
The slow global economic recovery has resulted in one percent drop in oil consumption from the average of around 76 million barrels per day, said Kumar.
Representing interests of American consumers against cartelisation of multinationals like Exxon Mobil to prevent price fixations, Kumar advises several state governments, municipal systems and major companies like Procter and Gamble, fertilizer and chemical groups on oil and gas procurement.
Kumar is also chairman of the Friends of India Society International and the U.S affiliate body of the Federation of Indian Chambers of Commerce and Industry (FICCI).
"We expected a slump in oil prices by November/December but prospects of a strike on Iraq scaled up the prices. Now with a heavy U.S strike on Iraq expected in February, the fall in prices is expected towards March-end," said Kumar.
Kumar opined that the strike on Iraq was not expected to last beyond two weeks as the public opinion was sharply against a prolonged military engagement in the Middle East.
Post-Iraq strike, Kumar expects the U.S and other non-OPEC (Organisation of Petroleum Exporting Countries) to step up production to cool crude oil prices, while the reduced demand is expected to have its own impact.
"While the multinational companies in the U.S and other non-OPEC have been enjoying the benefits of a high volatile market, in the event of an attack on Iraq, these companies are expected to rally with efforts of the countries to keep the prices under check with stepped up production to maintain supplies," said Kumar.
The private gas reserves of the companies in the U.S are also expected to play a major role in keeping the crude prices from rising further.
"As the trends go, with the U.S having a major influence on markets and producers, including in the Middle East, the high prices are not likely to sustain in the face of slower global demand," he said.
While the OPEC countries favour a $24 per barrel price for crude, most of the non-OPEC countries with lower production costs are targeting a price basket of $15-$17 per barrel, he said.
Source: IANS
Source: IANS