Oil prices have "upward bias": ICE CEO
NEW YORK (Reuters) - Crude oil prices have an "upward bias" long-term, mainly due to strong energy demand from the booming economies of China and India, the CEO of InterContinental Exchange Holdings (ICE.N) said on Wednesday.
"These are economies based on the same fuel usage we have in the West ... I just can't see that abating," Jeff Sprecher, the chief executive of the Atlanta-based exchange, told the Reuters Exchanges and Trading Summit.
"While the overheated growth in China we have seen in the past few years may have cooled, it is not quite a headline risk. And India is going to surpass China in terms of population in the next 20 years and is becoming a highly educated middle class society," he added.
"So why wouldn't those people want the same kind of thing you and I want," he said.
Sprecher was speaking as June U.S. crude oil futures jumped to an all-time high of $123.80 per barrel on Wednesday, fueled by government data showing a draw in distillates stocks last week in the United States, the world's top energy consumer.
Pointing to what he called the emergence of "an amazing middle class" in China, he said 15 million people a year were moving to cities and leaving the agricultural sector there.
"That's a new Los Angeles or a new New York being created every year," he said.
"It just says those people are going to need more clothes ... their economic lifestyle is going to go up and their demand for goods and services is going to go up and energy is the underpinning of what fuels that, even it if is not just transportation," Sprecher noted.
Asked if he thinks oil's bull run has legs, he said: "When I read articles of people who I respect saying that oil can easily go to $150 in the near term and $200 in the reasonable near term and you don't see an outcry of people taking an alternative view, it would tell me there is an upward bias."
Oil could shoot up to $200 a barrel within the next two years as part of a "super-spike" driven by poor growth in oil supplies, investment bank Goldman Sachs (GS.N) said in a research note on Tuesday. ID:nL06914488
The sky-high oil prices make it imperative to have sound U.S. policy addressing energy security, he said.
"If an accident happened where a tanker would sink in the Strait of Hormuz and block it for a while ... it would have an unbelievably negative impact on the U.S. economy, the spillover would be phenomenal," Sprecher added.
He was referring to the strategic Gulf waterway through which oil shipments from top exporters such as Saudi Arabia and Kuwait flow to world markets.
(For summit blog: summitnotebook.reuters.com/)
(For more on the Reuters Exchanges and Trading Summit, see ID:nN05402745
(Additional reporting by Kristina Cooke; Editing by Christian Wiessner)
