|SEven with the recession underway in early 2008, world
demand seemed slow to respond, and oil prices rose to peak in July 2008
|SCrude oil prices fell back to around $40 per barrel, but
OPEC cuts and continued demand strength in developing countries caused prices
to spring back up somewhat.
|SFor 2010, EIA is projecting prices around $70 per
barrel. With demand down, OPEC surplus
capacity has grown and is projected to remain at more “comfortable” (i.e.,
larger) levels than seen before the recession. But there is much uncertainty in the
|–On the one hand, demand could spring back faster than
anticipated, tightening markets more.
|–On the other hand, new supply sources in the face of a slow
demand comeback could diminish OPEC’s ability to hold back production,
causing prices to soften.
|SStill, the current EIA outlook is for prices not to drop
back to $40, but to stay higher.