Forecast sees $60 oil

The projection today by Julian Jessop, chief international economist at Capital Economics, is based on his belief that the U.S. dollar will strengthen and global demand for crude will probably “disappoint.” This is despite the fact such a move would bring the price below the range of $70 to $80 that some members of OPEC support.

More bullish projections tend to be based on “rapid growth” in demand from emerging countries, he said, but he doesn’t see that happening.
“It is hard to see why demand pressures should be much stronger now than was the case in 2007, when both advanced and developing economies had been booming for four years,” Mr. Jessop added. “Oil prices averaged $60 per barrel in the first half of 2007, which is where we think they could settle in the next few years as well. Admittedly, prices then rose to nearly $150 per barrel in 2008, but that proved to be a bubble.”

“The fact that not so long ago OPEC thought a price as low as $22 to $28 was defensible illustrates the difficulty of setting and maintaining a fixed target for oil prices.”
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