High global oil prices are likely to ease to $56 a barrel in 2007 and fall further to just below $53 in 2008 as supplies increase and demand growth eases, the World Bank said on Wednesday (Dec. 13).
Reuters reported that the World Bank’s annual Global Economic Prospects report said a record U.S. oil price of $78.40 in July weakened demand growth despite accelerated world economic activity.
“Over the medium term, limited spare capacity and strong global (economic) growth suggest that oil prices will remain volatile,” the World Bank said.
“The basic assumption is that because of the (economic) adjustments we are observing now, there is a tendency for oil prices to move in the long run to around $40 a barrel,” World Bank economist Hans Timmer told reporters.
The development lender said investments to expand production already in the works were likely to increase world output capacity by about 15 million barrels a day by 2010.
Energy experts see more oil production coming on-stream in the next few years from Africa, Saudi Arabia and the Caspian Sea.