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Market fundamentals only support oil at USD 75-80/bbl

June 06/2011

(ICIS) -- Crude oil prices should just hover at USD 75-80/bbl (EUR 51-54/bbl) given current market fundamentals and cost environment, said the top executive of Malaysias state-owned oil and gas firm Petronas on Monday. At midday, light sweet crude for July delivery was trading at USD 100.11/bbl, while Brent crude was quoted at USD 115.46/bbl.

Although high crude prices generally benefit oil companies, they also mean hefty production costs, Petronas president and CEO Shamsul Azhar Abbas told delegates at the opening ceremony of the 16th Asia Oil and Gas Conference (AOGC) in Kuala Lumpur.

While higher oil prices amid a recovery in demand have boosted capital expenditure in the industry, oil companies' production costs may hit new highs this year, he said.

Rising costs will test the industrys abilities to make its capital expenditure budgets go to their intended length, the Petronas chief said.

Meanwhile, Shamsul said that Asia must not be overlooked in upstream investments, citing that geology-based assessments have suggested that the regions mean undiscovered oil resources are in the order of about 50bn barrels.

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