Analyst calls oil at $100/barrel "pretty cheap"
WASHINGTON (Reuters) - Crude oil at $100 a barrel would still be "pretty cheap" because global oil demand shows no signs of abating and new energy sources are in short supply, a prominent U.S. oil analyst said on Thursday.
Matt Simmons, founder of Houston-based Simmons and Co International, dismissed the idea that a looming U.S. recession will tame crude oil prices, which have tumbled since they peaked above $100 a barrel on January 3.
"Demand is far more durable than anyone ever thought," Simmons told Reuters in an interview. "We're on an insatiable growth curve."
Simmons, one of the most outspoken proponents of the "peak oil" theory that world oil production is declining irreversibly, noted that thinning inventories, soaring demand from China, geopolitical turmoil and a weak dollar have pushed crude prices up more than 70 percent from a little over a year ago.
He declined to predict where crude oil prices will top out this year, but dismissed the U.S. Energy Information Administration's view that crude oil prices could drop below $90 a barrel this year.
U.S. crude fell $1.96 to $93.71 a barrel on Thursday, amid fears that a U.S. recession could spur a global slowdown and put the brakes on world energy demand.
"It doesn't mean anything," Simmons said of U.S. recession talk. "We've seen a steady, relentless rise in global oil demand."
Surging oil prices have darkened the economic outlook in the United States, already battered by a housing crisis. High oil prices also have threatened economic growth in Europe.
But Simmons said there are no indications that rising prices have dented the globe's thirst for oil.
According to the EIA, China alone is expected to account for over 400,000 barrels per day, or one-third, of world oil consumption growth in 2008.
Simmons said the crude oil price in the last few years has consistently surged past forecasts.
"At $30, oil was going to cause a recession. At $40, it was an aberration because of the fear factor and the war premium; $50 oil was hedge funds," he said.
The EIA has forecast that a surge of new production from non-OPEC suppliers such as Brazil, Russia, and new deepwater finds in the U.S. Gulf of Mexico could depress U.S. crude oil futures to near $80 a barrel in 2009.
"That's preposterous," Simmons said. He said production from many U.S. deepwater fields was "coming down like a rock."
The Thunder Horse field, operated by BP, will be the biggest producer in the Gulf of Mexico, but the field has been plagued by delays.
BP (BP.L) says the field should be online by the end of 2008 but "if it does come on at the end of 2008 we should not assume it will work perfectly," Simmons said.
(Editing by Russell Blinch and David Gregorio)
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