Crude investment 'needed to avoid price spike'

16/04/2009

Investment in crude oil is needed if a return to record highs is to be avoided, it has been stated.

A report by the Centre for Global Energy Studies (CGES) suggested that nations producing the resource need to ensure capacity is increased, AFP reports.

Without this, the energy consultancy predicted, long-term growth in demand will contribute to higher costs, which could mean domestic heating oil prices also rise.

The report noted that revenues have been hit by recent slumps, as crude prices have plunged from record high levels, cutting the amount available for investment.

"Although the falling demand for oil is creating additional spare production capacity … this picture could change when oil demand growth returns," CGES was quoted as saying.

Earlier this week, the Organization for Petroleum Exporting Countries cut its demand forecast for crude oil, noting that the global recession is affecting growth in countries such as the US, Japan and China in particular.