Oil to resume climb above $150: says Japaneese Energy Expert

Oil prices are likely to top $150 a barrel this year despite their recent slide on the dollar's rise against the euro and concerns that high prices may hurt growth in big economies, a Japanese commodity and energy expert said.

A slowdown in U.S., euro zone and Japanese economies may dampen growth in China and other emerging markets, but underlying demand for oil from rapidly developing nations remains solid as they seek to catch up with developed countries, Akio Shibata, director at the Marubeni Research Institute, told Reuters.

"This is a transition period as China and other emerging countries move towards becoming developed nations, and their underlying demand will persist at least in the next 15 to 20 years to keep upward pressure on energy costs," Shibata said.

Shibata provides regular updates to Japanese Ministry of Finance officials on the situation in commodities markets, and has been on several government panel on food and energy issues.

While a global economic slowdown may hit China and India, both nations are expected to grow relatively fast, and a drop in oil prices would only reinforce their demand, he said.

"It's unlikely that oil prices will fall back to double digits. Demand in these countries has not fallen to levels a year ago, and as long as they grow, there will be fresh demand for resources each year and that accumulative demand will keep supply tight."

Also, the cost of exploiting oil has risen while the supply of oil which can be removed cheaply is peaking out, Shibata said. The dollar also remains vulnerable as the U.S. housing market has yet to hit a bottom and credit market jitters persist.

"It looks unclear if the dollar will keep rising above 110 yen. If the dollar reverses its course and falls, oil will resume its climb and get back on a rising trend again," Shibata said.

Speculative and investor money will continue to flow into the oil market given the prospect for tight supply. Oil also remains vulnerable to concerns about supply disruptions and hurricanes.

"I think $200 is a possibility. Players see tight supply both in light of current and future fundamentals, which will draw money from speculative funds," Shibata said.

U.S. crude fell to a three-month low this week, dropping more than $30 in a month after hitting a record high $147.27 on July 11.

Oil prices have risen seven-fold since the start of 2002 amid surging demand from China and other emerging markets, and jumped 50 percent this year alone.

The rise in oil prices to a record peak highlights the limit to the industrial structures of developed countries that have relied on an assumption energy costs will remain relatively low the way they did until around 2000, Shibata said.

"It's a message from the market that developed countries are not doing enough to tackle the issue of global warming, or invest in innovations to save energy and boost efficiency in the use of energy and resources," Shibata said.

The recent steep drop in oil prices may delay action to tackle the urgent issue of global warming and seek alternatives to energy resources which are becoming scarce, Shibata said.

"Since swift action is not taken to change the industrial structure of developed countries that had been supported by cheaply available resources, the latest price drop is likely to be a temporary adjustment," he said.