FirstEnergy research: Oil to stay above $35 for rest of decade

Gary Park

FirstEnergy Capital, a Calgary-based investment dealer, does not see West Texas Intermediate prices dropping below $35 per barrel for the rest of the decade.

In a research report, First Energy has inflated its 2004 forecast by $4 per barrel and added another $6-$7 through 2007.

It now expects the 2004 WTI price will average $38.90, climbing to $40 in the final quarter, then continue at $38 from 2005 through 2007 and $35-$36 from 2008 through 2010.

FirstEnergy bases its outlook on International Energy Agency estimates of a finer supply-demand balance through the rest of the decade, combined with slow supply from non-OPEC countries.

In addition, it said more intensive capital along the crude supply chain points to higher prices to sustain cash flows and rates of return needed to pay for the massive infrastructure projects on the horizon.

FirstEnergy does not include any “fear premium” in its forecasts, arguing the market outlook should offer a “fundamentally based view.”