Dallas: Oil prices are heading to almost $140 (Rs5,978) a barrel in the next eight years, according to futures contracts on the New York Mercantile Exchange, on concern that growth in supply may fail to keep pace with rising demand.
Oil for delivery in December 2016 surged $17.08, or 14%, in the past three trading days since Goldman Sachs Group Inc., the world’s biggest securities firm by market value, forecast oil would average $141 in the second half of 2008 on constraints in production and a lack of substitutes. Crude for July 2008 climbed 1.9% in the same period, and on Wednesday rose to a record $130.47.
The gain, more than triple the increase in oil for delivery this summer, “fits in” with the Goldman forecast which “talked recently about long-dated crude in particular,” said Tim Evans, an energy analyst for Citi Futures Perspective in New York.
Oil giants such as Exxon Mobil Corp., Royal Dutch Shell Plc., BP Plc., Chevron Corp., Total SA and ConocoPhillips will spend $98.7 billion on exploration and production, more than quadruple the amount eight years ago. The supplies companies tap from oil producers not part of the Organization of Petroleum Exporting Countries will only meet about 20% of world demand growth.