Crude oil prices 'unlikely to spike again this year'

22 April 2009

Oil prices are likely to reach more than $50 (£34.25) a barrel in the second half of this year, but there will not be any major spike in the market even as the economy begins to recover, an expert has claimed.

Christof Ruehl, chief economist at BP, said prices will stabilise during the remainder of 2009 and should remain above the $50 mark, as long as Opec maintains its quota cuts and the economy stops shrinking.

He claimed that this would be enough to help bring down the high inventories that are currently weighing heavy on the market, prompting a recovery in the price of crude oil.

However, Mr Ruehl admitted that values are unlikely to return to the "stellar levels" seen over the last few years, as it will take some time before demand begins to eat through the current spare capacity.

"Even if we went back to the demand growth rates of the past few years, it would take three years to get back to a market that was as tight as last year," he commented.

Home heating oil customers have already seen crude prices fall by more than $100 a barrel since last summer due to the economic crisis.

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