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May 13 (Bloomberg) -- Slower global economic growth won't
halt rising oil prices because supply is failing to keep up with
demand, according to Jochen Hitzfeld, a Munich-based economist at
UniCredit SpA.
     ``Since the fourth quarter of 2007, demand has been roughly
2 million barrels per day above supply, which is stagnating at
close to 85 mbpd,'' Hitzfeld wrote in a research report today.
``The falloff in demand for oil because of the global economic
slowdown will trigger only a slight decline in this primary
deficit. We anticipate a drastic inventory rundown.''
     The chart of the day tracks the increase in crude-oil
futures traded on the New York Mercantile Exchange, showing the
average prices of $74 for 2007 and $103 so far this year in
green. Hitzfeld today raised his 2008 forecast to $115 from $100
previously, and his 2009 forecast to $125 from $105. Those
predictions are shown in red.
     ``Analysis of the 230 most important new production projects
shows that even if all projects can be realized as planned, there
will be a supply/demand gap of 12.5 mbpd, or close to 15 percent
of current demand, in coming years,'' Hitzfeld wrote. ``Without
counter-measures, this will undoubtedly trigger a supply crunch
and escalating oil prices.''