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US recession seen reducing oil demand

(HOUSTON) A US recession will curb demand for energy before high crude oil prices will, Boone Pickens, chairman of Dallas-based hedge fund BP Capital LLC, told an audience of geologists in Houston on Monday.

‘Demand destruction will come from recession; US$100 oil is acceptable,’ Mr Pickens said. It’s likely the US is already in a recession that will eventually lead to lessened energy demand, he said.

‘I don’t think the rest of the world is in recession,’ added Mr Pickens, who founded Mesa Petroleum in 1956. He now manages more than US$4 billion in energy investments.

Mr Pickens correctly predicted in 2004 that oil prices would top US$60 a barrel in 2005. Last February, he said oil could reach US$90 to US$100 a barrel within two years.

New York crude oil futures touched a record US$100.09 a barrel on the New York Mercantile Exchange on Jan 3 amid tight US inventories and political unrest in Nigeria threatening to disrupt production in that region. That’s the highest price since trading began in 1983.

World oil consumption will rise to 87.8 million barrels a day this year, 2.1 million more than in 2007, according to the Paris-based International Energy Agency, an adviser to oil- consuming nations.

 

Source: Bloomberg (Business Times 16 Jan 08)

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