The age of cheap oil prices is over, comments IEA Chief

Global oil demand is set to hit a new record in 2011 (peak oil anybody?) and we maybe getting closer to waving goodbye to cheap oil prices, according to the IEA ahead of their December 2010 oil report.

The Age Of Cheap Oil Over?

“In terms oil markets, I believe the age of cheap oil is over. There may be zig-zags in the future according to the economy, this and that, but the general trend is we will see higher oil prices.” IEA Chief Economist Fatih Birol said at a conference in Budapest, Hungary on 26th November.

The bottom line is that crude oil demand is extremely strong and is set to climb even higher, with emerging economies in the driving seat.

China’s recent stronger demand for oil has contributed to the large move in crude prices, with the IEA forecasting Chinese oil consumption will grow by 9.8% for 2010 alone. See illustration below:

OPEC Sec. General Says $100 Oil Potentially Undamaging

Meanwhile, OPEC Secretary General Abdalla El-Badri said prices at $100 wouldn’t necessarily damage the global recovery or prompt it to increase oil production unless accompanied by a oil supply disruption.

JP Morgan’s recent oil price forecast had commented that OPEC is unlikely to increase it’s members oil production in the first half of 2011 unless oil prices surge through $100 a barrel.

So, Where Next for Oil Prices

A change in the oil markets may now be upon us and this is being reflected in higher oil prices.

Crude oil prices are nearly certain to climb past $100 in 2011 as central banks pump cash into their economy’s to revive growth, as recently forecasted by JPMorgan and Merrill Lynch. The more money pumped into economies in the west to prop up failed banks will have affects both in stock markets, but also commodity prices, of which oil is the star.

With a weaker US dollar and rising oil demand, investors may turn increasingly to oil futures and other commodities to make decent returns.

• WTI oil trading over $88, all bad news for US consumers
• WTI oil price firm over $87 & rising on weak US dollar
• WTI oil price at 2010 highs over $87 on weak US dollar
• Oil prices fell $5 this week, fears of weak oil demand grow
• Higher oil prices will mean misery for many UK motorists
• Goldman Sachs forecast that oil prices are too cheap
• Uncertain week ahead for oil prices as La Nina forms
• Light oil price trading up as US dollar takes a knock
• Oil prices trading near 2010 highs as OPEC holds output
• Goldman Sachs predicts summer oil price at $92 – $97 range
• Oil prices trading higher as IEA raises 2010 forecast
• IEA sees encouraging economy signs to lift oil prices
• Brent oil price closes over $91 mark, $100 oil for 2011?
• Brent oil trading near $91 amid firm ICE Dollar Index
• Brent oil price ends week near $86 amid Euro concerns
• Dollar Index strength may tumble oil prices in 2011
• WTI oil price weakens to $83, eyes on US dollar v Euro
• IEA forecasts that peak oil production started in 2006
• Brent oil price surges over $85 on holiday market rally
• Brent oil trading over $85 as EU, IMF agree Irish bailout

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The age of cheap oil prices is over, comments IEA Chief