New York, United States — ESI-AFRICA.COM — 04 January 2011 – The fact that oil demand is increasing at almost twice the pace of supply, is spurring the most accurate forecasters involved in the energy industry to predict the second-highest price on record in 2011.
Bloomberg News quotes Sanford C. Bernstein & Company, whose estimate last January was within 1% of the 2010 mean price of US$79.60 a barrel, as saying that crude will average US$90 this year. Natixis Bleichroeder Incorporated, which tied with Bernstein, sees US$100 a barrel “’ 26% higher than in 2010.
Global oil use will increase 1.7% to a record 87.8 million barrels a day this year, and output will rise 0.9%, according to the U.S. Energy Department.
While economic growth in China, the world’s biggest energy consumer, is expected to slow to 9% this year from 10%, it would still be three times the rate in the United States and six times that of Europe, according to the median estimate in Bloomberg surveys of economists. As oil prices rise, spare production capacity may drop the most since 2003 as exporters, including the 12 members of OPEC, boost supply, according to Bernstein.
“We expect OPEC to have to increase its production, causing a reduction in spare capacity, which to us is increasingly becoming a more important determinant of oil prices,” said Oswald Clint, who replaced Neil McMahon in August as Bernstein’s head oil analyst in London. “Since China became a more important part of the demand pie, the spare-capacity factor has become more important.”