BP sees oil holding current range in 2010

LONDON (Reuters) - Oil is likely to hold in its current price range during 2010, although some upwards movement could be possible, oil major BP's (BP.L) Chief Economist told Reuters on Monday.

"We would expect oil prices for the remainder of the year in the current range, perhaps with a slight upwards drift but no dramatic spikes," Christof Ruehl said in an interview with Reuters Insider television on the sidelines of an industry conference in London.

Oil has traded in a relatively tight $15 range between $69 and $84 a barrel since the beginning of October. At the peak of the financial crisis, oil crashed below $40 a barrel from a July 2008 record of almost $150, but expectations of an economic recovery have supported prices since then.

Ruehl said that the same factors that drove up prices by almost 100 percent in 2009 -- lower OPEC output and the global economic recovery -- will support prices in 2010 and set the price floor.

But he added a strong rebound in demand was not as likely as some commentators think, saying daily consumption growth would be below the average levels of 1.1 million barrels seen in the years before the financial crisis

"We are at the moderate end of that scale," Ruehl said. The International Energy Agency predicted on Thursday demand would grow by 1.6 million barrels per day (bpd) in 2010 to average 86.5 million bpd.

Ruehl said even a stronger than expected rebound in demand should not automatically lead to a spike in prices, estimating spare production capacity is currently around 6 million bpd.

"Even if the good years were to return tomorrow it would still take more than three years before we have burned through the excess capacity and back to a market as tight as it was before the crunch in 2008," he said.

Asked about the impact of recent Chinese moves to tighten monetary policy Ruehl said: "The impact on demand growth may not be as dramatic as it looks right now," adding that China was still buying strategic oil reserves and running refineries at high rates.

(Reporting by Jane Grieve and Emma Farge; Writing by David Sheppard; Editing by Keiron Henderson)