Crude oil prices may rise on Gulf of Mexico oil spill disaster

The US oil spill disaster currently spreading across the Gulf of Mexico will help drive energy and crude oil prices higher as new measures to prevent further disasters bump oil production costs, the head of commodities and energy at BNP Paribas told the Reuters Energy Summit on Monday. The massive spill, caused by a well blowout and rig explosion last month, is one of a number of factors that will help oil prices rebound to the mid $70 a barrel range or higher this year after dropping sharply in recent weeks. “We see crude moving back to the mid $70, $80 area, with Chinese demand continuing and increased costs coming through to production by virtue of what we are seeing in the Gulf right now,” said Lincoln Payton. “At some point that will trickle through to the consumer.” Oil prices have sunk to $70 a barrel after rising to nearly $90 a barrel at the beginning of May, as swelling US inventories and euro zone economic woes weighed on sentiment. But, going forward, natural resources are a relatively safe investment as continuing economic uncertainty tarnishes other purely financial plays, Payton said. “This is a very dangerous time,” he said. “With the European stress in the last few weeks, we have seen a change in sentiment. That has brought a lightening of risk but also a lack of confidence. “I think you can take a medium long-term position comfortably in certain natural resource businesses because we can assume that they are and always will be fundamental to our economies.” “We have seen natural gas go through a cycle where there was a perceived surfeit and I think in the medium term that is going to change,” Payton said. “I see natural gas being a good investment in the medium term and that probably kicks in about a year.” Despite low prices, the number of rigs drilling for gas has been on a mostly steady uptrend this year, a trend Payton puts down to the promise of future price rises. Light oil prices trading up over $86 on messy Gulf oil spill BP pasted by more setbacks over US Gulf crude oil spill Obama sends US nuclear physicists to tackle Gulf oil leak Oil slick chaos as 210,000 gallons leaking daily into Gulf Gulf of Mexico oil rig spill serious, leaking 42,000 gallons daily Gulf oil rig disaster spilling 300,000 gallons of oil per day Brent oil trading lower on continued euro debt concerns Oil prices trading at $71 mark, following stock markets Oil prices back at $70 range after 20 percent May losses Oil prices trading near $70 as global stock markets slump Oil prices dropping off a cliff with stock markets in tow BP in deeper trouble, has hands full with Gulf oil slick chaos Oil prices again being lead by dollar and euro swings Gulf spill of 210,000 gallons daily may push oil over $100 Oil prices back in $85 to $90 trading range, in mixed week Oil prices start the week trading higher on US data Transocean, Gulf of Mexico rocked by large oil rig explosion US Light oil trading higher, near $82 on Goldman, markets OPEC would consider raising output if oil prices hit $95 mark Oil prices trading firm on US data, homing in on $90 barrel

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Crude oil prices may rise on Gulf of Mexico oil spill disaster