Oil prices are unlikely to cross $100 per barrel in the near future due to near record inventory levels and Opec’s five million barrels of spare capacity, according to an expert.

Richard Savage, head of energy research at the 190-year-old private Swiss bankers Mirabaud & Cie, said the real driver of the oil price rally was not the intricacies of the supply-demand balance, but instead the same surfeit of liquidity that drove other asset classes to unsustainable highs; the withdrawal of that liquidity leading to the dramatic collapse.

He was speaking at an investment seminar held in Muscat yesterday (March 1), where Mirabaud joined forces with Lloyd George Management, the far Eastern investment manager, to guide investors through the current economic crisis.

Savage noted that the crude oil price has tumbled from an intra-day high of more than $147 a barrel last July to less than $45 a barrel today, as fears of supply shortages have given way to concerns over dwindling demand.

“The market is once again being driven by fundamentals, and with inventories at near record levels and Opec sitting on five million barrels of spare capacity, we do not expect a recovery anytime soon,” he said.

“In addition, once the price does rally, we do not see a return to a $100+ per barrel world. We believe a $75 per barrel oil price is high enough to incentivise all but the most expensive producers; it is high enough to encourage investment in alternative energy sources, and it is high enough to put a break on the explosive demand growth that was the catalyst for the last oil price rally.”

Other subjects raised at the conference included investment opportunities in Asia, delivered by the renowned Asian investor Robert Lloyd George, as well as the Fixed Interest and Currency markets discussed by representatives of co-sponsors Eaton Vance and Sal Oppenheim, respectively.

“It is at times such as these that the experience and conservatism that comes from one of the most well established private Swiss banks stands the investor in good stead,” said Gilles Rollet, chief executive officer, Mirabaud (Midddle East).

“Guided by the incisive views of these highly regarded market participants, we feel certain the seminar helped delegates see more clearly through the opaque nature of markets currently prevailing.” – TradeArabia News Service