(EnergyAsia, June 29) — While oil prices are expected to remain high for the balance of the year – peaking at US$62/barrel — many North American executives and institutional investors believe that oil prices will fall back to US$35/barrel by 2010, according to a poll by investment bank RBC Capital Markets.
Canada-based RBC said that while two thirds of those polled expect oil prices to retreat to US $35 in the next five years, nearly one third said it could reach US$100 in the same timeframe. Most respondents indicated that they believe oil prices will retreat to roughly US$53/b by year-end.
When asked about the average price at the pump this year, survey respondents believed prices would be about US$2.60/gallon.
Most predicted that natural gas would sell for US$7.70 per million cubic feet (mcf) by the end of the year, up significantly from last winter’s US$6.24 price.
Higher energy costs will have a negative impact on the general economy, the executives said. Almost half of the respondents said that they are concerned about an economic slowdown.
Kurt Hallead, managing director at RBC Capital Markets, said: “The effects of rising oil prices on global economic growth and the demand for energy in China continue to impact the fortunes of the energy industry. While this trend will likely continue, concerns about terrorism have largely abated thereby substantially reducing the supply disruption premium.”
Looking to the future, respondents identified the oil services sector as the most promising for investors during 2005. They were also bullish on the Oil Service Index (OSX), predicting that it would continue to rise through 2006 to 151.46. That’s more than a 10% increase from where it trades at now.
The region with the greatest opportunity for production over the next two to three years was the Middle East. This includes Iraq, even though 84% of respondents said it would likely take until 2007 or longer for that country to produce oil in significant amounts.