Business and Finance

The old saying what goes up must come down seemed true of oil markets this week as falling demand helped to wipe more than $10 off the price, but long-term supply constraints could keep investors keen.

Bullish forecasters say the record rally that took prices to more than $147 a barrel last week has a long way to run and that it will take years to make up for a chronic lack of investment in bringing on new supplies.

Others say prices, which were below $134 a barrel early on Thursday, have hit the kind of levels that have a significant impact on demand.

“We believe the 100 percent rise in the oil price over the last year is not sustainable going forwards,” said Richard Batty of Standard Life Investments.

“While cheap oil may be a thing of the past, oil prices could be much more volatile, falling and rising with the business cycle in the years ahead.”

Oil contracts for delivery as far into the future as December 2016 have traded above $140 and are still above $130, implying strength in the market will be maintained.

Goldman Sachs, one of the most active investment banks in the commodities markets, has predicted prices could reach $200 and oil tycoon T faxless payday advance. Boone Pickens said this month prices would not ever fall below $100.

But $100-plus oil and fall-out from the credit market crisis is spilling over into the wider economy. 

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