Current high prices for oil are unlikely to last but prices but should not fall back to 2004 levels, according to latest analysis.
Recent rises in oil prices have arisen for temporary factors and should moderate due to lower than expected demand, according to two analyses of the oil market released yesterday.
A US government report yesterday blamed hurricanes in the Gulf of Mexico for disrupting oil supplies last week. The report of the US Energy Information follows a temporary rise in the price of crude oil to almost record levels.
Oil prices fell back toward $60 dollars (€49.6) a barrel as tropical storms receded. The latest monthly analysis of the oil market by the International Energy Agency (IEA), also published yesterday, shows an easing of world demand for oil within levels that are more compatible with supply.
Recent rises in oil prices reflect concerns about the lack of available capacity to refine crude oil, as well as fears of rising demand from China.
However, according to the IEA, the immediate outlook for oil prices is more moderate, with oil demand in China and Europe being lower than expected.
Oil prices are likely to remain significantly higher in 2005 than a year ago before falling somewhat in 2006. According to a Reuters poll of key oil analysts published last Monday, the price of a barrel of Brent crude oil - an accepted benchmark - is forecast to average $52.11, compared with $41.47 in 2004 before falling back to $47.70.
Last Monday, Central Bank Governor John Hurley warned of the vulnerability of the Irish economy to a further increase in oil prices.
The Central Bank's latest forecast, for economic growth of around five per cent this year, assumes that the average oil price will remain at a level of $50 per barrel.
