By Lorenzo Totaro
May 25 (Bloomberg) -- International Monetary Fund First Deputy Managing Director John Lipsky said rising oil prices reflect expectations that the recession may be easing and that demand is poised to recover.
The increase reflects “a general improvement in sentiment on signs that the sharpest period of decline in the global economy is over,” Lipsky said in the text of a speech at a meeting of energy ministers of the Group of Eight nations in Rome today. Prices also rose on “expectations that the contraction in oil demand may bottom out soon.”
Crude oil traded at $61.27 a barrel in after-hours electronic trading on the New York Mercantile Exchange and at $61.36 at 12:34 p.m. in Singapore -- up 81 percent from around $34 on Feb. 12, the low for this year. Prices will remain above $50 for the rest of this year and top $60 next year, according to the median forecast of analysts surveyed by Bloomberg.
Lipsky also said policy makers should find ways to reduce oil price volatility and its consequences on the global economy.
“Rapid oil price changes are detrimental to both global growth and to global economic and financial stability,” he said. Policy makers should “address the principal factors underlying large oil price swings.”
The Washington-based lender said last month that the world economy will shrink 1.3 percent this year. It also said Saudi Arabia, the largest producer in the OPEC, will see its gross domestic product shrink 0.9 percent this year, while the United Arab Emirates will decline 0.6 percent and Kuwait 1.1 percent. By 2010, the IMF expects the Gulf oil states to resume expanding, while advanced economies as a whole have no growth.
To contact the reporter on this story: Lorenzo Totaro in Rome at ltotaro@bloomberg.net
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