Crude Oil may rise before additional production : Marc Faber

Marc Faber on CNBC Tuesday 08 march 2011 : Rising crude oil prices has been a matter of grave concern in the past few days. Investment guru Marc Faber believes that crude may rise further before additional production comes into play. We need to find new oil fields and develop them and that is very costly. I would estimate the marginal cost of adding new oil at USD 80 per barrel, he said.

Marc Faber " what we had on the oil market in the last couple of years is essentially reduction of demand from the developed World from the United States western Europe Japan , and continuous growth in the emerging economies , so if you take a very optimistic view of the world namely a global economic recovery demand in the western world will pick up and demand in the emerging world will continue to rise very strongly, and so from a very optimistic point of view, you should be long oil.Of course we have had a huge run up and I think energy shares and oil is due for a correction but in an optimistic scenario you should be long Oil and also other industrial commodities , in a very pessimistic scenario you have to assume that unrest will shift also to Saudi Arabia and other countries in the gulf, and at that stage, maybe production may be curtailed, and in that case, obviously oil would go up ballistically... " Marc Faber told CNBC on Tuesday 08 march 2011 "Oil prices will spike up before additional production will come into play ....yes you can increase the production but to increase the reserves it is very difficult and very costly and the fact is simply that the world is burning more oil than it is adding in reserves every year So the level of overall proven reserves, or the existing oilfields - that production will go down,so you have to find new oil fields or develop new ones over time and that is very costly " Marc Faber added
Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.