>Oil & Gas Industry (PRABHUDAS LILLADHER)

Oil – unlikely to stay much above US$55

■ Crude oil prices trebled from about US$50/bbl in early 2007 to over US$150/bbl during mid 2008, further nose-diving to US$30/bbl.

■ Hedge funds interest pushed up oil prices, though now expecting a decline in their activity

■ Extraneous factors like geopolitical tensions across oil-producing countries, aid by governments to propel their economies etc. will swing the crude prices sharply

■ Expect oil prices to broadly hover between US$45-55/bbl over next year

■ In contrast to the crude prices, natural gas prices moved up, albeit slowly

■ A sudden drop in the economic activity has put pressure on the natural gas prices

■ Natural gas prices to remain quite subdued in the near term due to an expected surge in LNG
supplies

■ Long-term crude futures remain in a contango, with sharp recovery in crude prices towards end of 2010

■ Long-term natural gas futures depict a sharper price recovery and much earlier by end of 2009

To see full report: OIL & GAS INDUSTRY