Oil prices at US$70 not sustainable

JAKARTA – Oil prices that soared above US$70 (N$455) a barrel are ultimately unsustainable as they will erode consumption, the chief executive of Chevron Corp, the No.

2 US oil company, said yesterday. Chevron has been among the more aggressive oil majors in calling an end to the “era of cheap oil”, showing its confidence in strong prices by paying over US$17 billion for independent US oil and gas firm Unocal earlier this month.But Chevron’s head David O’Reilly said the latest spike appeared high enough to provoke a response from consumers, which analysts say will be necessary to cool markets fired up over swiftly rising consumption and years of underinvestment.”I don’t believe that today’s price is necessarily sustainable because I do see demand moderating,” he told reporters on the sidelines of an industry conference in Jakarta.”I just think we are in a tight supply and demand balance.”He did not say what he thought was a sustainable price.US oil prices raced to a record high US$70,80 a barrel on Monday as traders feared Hurricane Katrina could do lasting damage to US Gulf Coast oil production and refining equipment, straining an industry already working nearly flat-out.But yesterday oil held just above US$68 a barrel as oil firms assessed the damage.-Nampa-ReutersChevron has been among the more aggressive oil majors in calling an end to the “era of cheap oil”, showing its confidence in strong prices by paying over US$17 billion for independent US oil and gas firm Unocal earlier this month.But Chevron’s head David O’Reilly said the latest spike appeared high enough to provoke a response from consumers, which analysts say will be necessary to cool markets fired up over swiftly rising consumption and years of underinvestment.”I don’t believe that today’s price is necessarily sustainable because I do see demand moderating,” he told reporters on the sidelines of an industry conference in Jakarta.”I just think we are in a tight supply and demand balance.”He did not say what he thought was a sustainable price.US oil prices raced to a record high US$70,80 a barrel on Monday as traders feared Hurricane Katrina could do lasting damage to US Gulf Coast oil production and refining equipment, straining an industry already working nearly flat-out.But yesterday oil held just above US$68 a barrel as oil firms assessed the damage.-Nampa-Reuters