Wednesday, September 10, 2008

Crude oil to remain in $50-100 a barrel range - Fitch

Press Trust Of India / New Delhi

Global rating agency Fitch today said it expects oil prices to remain in the range of USD 50- 100 per barrel despite fall in prices in the last few weeks.

"Companies whose margins are under threat from high crude oil and gas prices need to be prepared for crude oil prices to remain in the range of $50-100/barrel," Fitch said in a report.

Crude oil contract for October closed at around $109 a barrel on Friday from its all-time high of $147 a barrel.

According to Fitch oil prices would continue to decline, particularly as the global economy slows. However, it does not anticipate that the price levels seen in 2004 and prior are likely to recur.

The report also noted that the oil and gas price environment over the last 18-24 months have generally benefited the oil and gas firms, as unprecedented high real wholesale prices mostly led to a significant increase in cash flows and margins.

However, some firms without significant upstream exploration and production (E&P) assets have, conversely, faced a significant margin squeeze.

The financial performance of companies like Indian Oil Corporation and Sinopec of China has suffered significantly over the last two years because governments, wanting to control inflation and maintain economic growth momentum, have not allowed the companies to fully pass through the higher costs of crude oil to customers.

In contrast to this, Goldman Sachs analyst Arjun N Murti believed crude oil price may fall by nearly half to below 75 dollars a barrel, but after 20 years.

Courtesy: business-standard.com

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