Opec said earlier this month that it was “comfortable” with crude oil prices at between $70 and $80 per barrel.
Well, if the latest analysis from the Centre for Global Energy Studies is to be believed, its members will remain “comfortable” for a while longer.
The centre’s “reference case” - its most likely scenario - predicts that macroeconomic declines will cut oil demand but supplies will also fall with fewer new projects coming onstream. Overall, the study says:
The rates of growth of both oil demand and oil supply decline in 2H10, but the slowdown on the demand side is more pronounced.
This is their reference case price scenario :
3Q10 – $77.10
4Q10 – $74.80
1Q11 – $71
2Q11 – $75.10
The uptick in 2011 is again driven by macroeconomic trends, with CGES predicting a faster global recovery by this stage.
The study has a high price case, which is based on an unexpectedly cold winter in the northern hemisphere. This would see prices rising over $100 a barrel by the fourth quarter of 2011, but CGES dismisses this as a “somewhat artificial construct” since such a rise would see Opec ramp up production and bring prices back down.
The low price case is based on the possibility of double-dip recessions in OECD countries, something it calls “very possible”. But it dismisses the overall chance of oil prices being lower than the reference case as having a 4 per cent probability, and the chance of them being higher as 5 per cent likely.
All in all, reassuring reading for the cartel.