NEW YORK - Oil producers in the Middle East are expected to fight hard to keep crude oil above $40 a barrel although near-term forecasts are for lower prices, an official with U.S. fund manager BlackRock said Monday.
"We're in a nasty global recession and oil demand will go down," Bob Doll, global chief investment officer of equities at BlackRock, told the Reuters Investment Outlook Summit in New York.
"Is it going to $30? No. Our view is that $40 is a flashpoint for many of the Middle East countries. They will protect the $40 price," Doll said.
Crude oil prices are down 70 percent from this year's record highs as the worldwide economic downturn cuts demand for fuel from the world's top energy consuming country, the United States, as well as China and India.
At 2:00 p.m. (1900 GMT) benchmark crude on the New York Mercantile Exchange, or NYMEX, hovered at around $43 a barrel, up 6 percent from Friday, but way off July's peak of above $147.
Investment banks have forecast even lower oil prices for next year, with Merrill Lynch putting a 2009 low of $25.
Doll said the market had to go higher, ultimately.
"Eventually, I think oil prices will be a lot higher than they are today," he said in an interview later with Reuters Television. "Maybe $150 again. Maybe $200 out there in a bunch of years, unless we do something to find more ways to capture the use of energy through either hydrocarbons or other means."
He said the recession had severely crimped oil exploration activity.
"We're not drilling enough holes in the ground to even replace what we're using. People are sitting on their hands, projects are getting canceled," Doll said.
"When we get economic recovery, we're going to use more of the stuff again and we haven't found enough of it. Therefore, the supply and demand imbalance is still a problem, which will again call for higher prices."
The Organization of the Petroleum Exporting Countries, which groups the world's largest oil producers, including many from the Middle East, is expected to cut crude output to boost prices when it meets in Algeria on December 17. OPEC has already agreed to cut about 2 million barrels per day in production as prices fell below the $100 mark.
"We're in a nasty global recession and oil demand will go down," Bob Doll, global chief investment officer of equities at BlackRock, told the Reuters Investment Outlook Summit in New York.
"Is it going to $30? No. Our view is that $40 is a flashpoint for many of the Middle East countries. They will protect the $40 price," Doll said.
Crude oil prices are down 70 percent from this year's record highs as the worldwide economic downturn cuts demand for fuel from the world's top energy consuming country, the United States, as well as China and India.
At 2:00 p.m. (1900 GMT) benchmark crude on the New York Mercantile Exchange, or NYMEX, hovered at around $43 a barrel, up 6 percent from Friday, but way off July's peak of above $147.
Investment banks have forecast even lower oil prices for next year, with Merrill Lynch putting a 2009 low of $25.
Doll said the market had to go higher, ultimately.
"Eventually, I think oil prices will be a lot higher than they are today," he said in an interview later with Reuters Television. "Maybe $150 again. Maybe $200 out there in a bunch of years, unless we do something to find more ways to capture the use of energy through either hydrocarbons or other means."
He said the recession had severely crimped oil exploration activity.
"We're not drilling enough holes in the ground to even replace what we're using. People are sitting on their hands, projects are getting canceled," Doll said.
"When we get economic recovery, we're going to use more of the stuff again and we haven't found enough of it. Therefore, the supply and demand imbalance is still a problem, which will again call for higher prices."
The Organization of the Petroleum Exporting Countries, which groups the world's largest oil producers, including many from the Middle East, is expected to cut crude output to boost prices when it meets in Algeria on December 17. OPEC has already agreed to cut about 2 million barrels per day in production as prices fell below the $100 mark.
