Merrill Lynch sees oil staying high in 2005

The oil price, which has roughly doubled since the start of 2000, and risen by over 60% this year, is likely to remain historically high in 2005 due to a structural shift in the market, said Robin Batchelor, co-fund manager of Merrill Lynch’s World Energy Fund.

In a presentation to reporters in London, Batchelor laid out the supply and demand dynamics he believes will support the oil price in the coming months.

Underpinning the shift from an oil price in the $20s during the 1980s and 1990s to a current long-term oil price above $30 a barrel is Saudi Arabia’s budget requirements, he said.

“In the '80s Saudi Arabia could balance its budget with $20 a barrel oil,” he said. “But there’s been huge population growth and now, independent research estimate