Crude oil prices, which rose to a record US$55 a barrel in New York on Friday, may increase further and peak at US$75 a barrel, said Bernard Dan, president of the Chicago Board of Trade, the second-biggest US futures market.
"Given that some production is going on around the world, I can’t see it much higher than US$75 unless there are disruptions in supply lines," Dan said on Nine Network’s Business Sunday show in Sydney. "I think that the US economy is strong enough to absorb that."
Crude oil for delivery next month closed on Friday at US$54.93 a barrel on the New York Mercantile Exchange after reaching US$55 during the day, the highest since futures began in 1983.
Futures were boosted by comments from Federal Reserve Chairman Alan Greenspan, who said oil isn’t high enough to slow expansion as much as in prior oil shocks. High oil prices helped push the US economy into recession in the 1970s and 1980s, and caused demand to plunge by 19 percent between 1978 and 1983, according to the US Energy Department.
While a rise to US$75 sounded significant, the majority of oil traders and consumers had "priced in that sort of range and while it may do some damage in terms of the economy and may be reflected in our equity market, I don’t think it’s going to be at a level where it’s catastrophic," Dan said.
It’s clear though that rising energy prices are creating concern in US equity markets, he said.