MANILA, Philippines (AP) -- Oil prices are expected to remain high over the long term amid signs that crude supplies are just barely keeping up with growing global demand, experts said Wednesday.
Prices are expected to remain high and volatile mainly due to market fundamentals and not due to speculation, said Robert Weiner, a professor at George Washington University in Washington, D.C., in the U.S.
''The expectations people have are that the dramatic increases in oil prices will be permanent,'' he told a video conference on oil price volatility in Asia.
Crude oil futures prices on the New York Mercantile Exchange have nearly doubled in the last year, with the front-month contract hitting an all-time high of US$135.09 a barrel on May 22.
In late afternoon electronic trading Wednesday in Asia, the contract for July delivery was near US$123.50 a barrel. Oil prices have been retreating since late May on indications that the high prices are finally having a significant effect on demand.
Ben Koyama, a director of the Institute of Energy Economics, Japan, or IEEJ, told the forum, though, that the futures market has pegged the price of oil next month at US$130 per barrel, with the price expected to remain at around US$130 three years from now.
The 2008 average price of West Texas Intermediate, the grade of crude oil traded on Nymex, may reach around the US$110-US$120 level, Koyama added at the forum sponsored by the World Bank Institute and the Global Development Learning Network.
He said supply and demand fundamentals, expectations that oil prices will remain high, geopolitical risks and financial markets are all pushing oil prices up.
''Oil demand is growing so rapidly ... and supply is getting tighter, therefore it is expected that demand will outstrip supply in the future,'' Koyama said.
Demand continues to rise in developing Asia and the Middle East, with China's oil import expected to increase in 2030 to 600 million metric tons -- roughly the same amount produced by Saudi Arabia in a year, he said.
At the same time, supplies and production are falling in the U.S., the North Sea, Russia, the Middle East and the former Soviet Republics. The increasing control of oil resources by national oil companies is also constraining supply.