Tags: Stuart | oil | rally | over

Credit Suisse’s Stuart: Oil Prices Haven’t Finished Rising

Monday, 16 Apr 2012 07:33 AM

By Dan Weil

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With crude oil prices having dropped more than 6 percent from their February highs, some experts are beginning to speculate that the oil rally is over.

Jan Stuart, head of energy research at Credit Suisse, begs to differ. "The balance of risks for the oil price is firmly to the upside," he tells Yahoo.

The recent price slump simply represents a correction, Stuart says. "The speculative froth, if there is any, may be coming off. The hysteria may be dissipating,” he says.

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“But underlying supply and demand firmly shows things are tightening and should be getting tighter not looser going forward."

Stuart believes the International Energy Agency is underestimating oil demand from both emerging and developed markets.

For example, Americans have shown that they can handle gasoline prices of $4 per gallon, he says. "People are better able to afford to pay a little more for gas."

When it comes to supply, OPEC and non-OPEC producers don’t have capacity to bring a lot more oil to the market, Stuart says. And he’s not looking for "peace and stability" to suddenly break out in the Mideast.

As for oil bears, some point to Saudi Arabian Oil Minister Ali al-Naimi’s remarks that the kingdom won’t stand for higher prices.

“The Saudi comment is a definitely negative sign,” oil analyst Phil Flynn of PFGBest tells Bloomberg. “The oil market is higher than it should be based on global supply.”

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