Oil, gold, grain prices to stay strong: analysts

[Flabbergasted]

Oil, gold, grain prices to stay strong: analysts
Tue Jul 31, 2007 2:52PM EDT


By Sam Nelson

CHICAGO (Reuters) - Crude oil, gold and grain prices will keep rising as demand for commodities plays catch up with a robust global economy, analysts said on Tuesday.

"Global demand for oil is expected to rise by 50 percent in the next 25 years, in China the demand is at record highs and will continue to rise," Phil Flynn, energy analyst for Alaron Trading Corporation, told an annual Commodities Outlook form.

And he said "a strong stock market coupled with a weak dollar suggests that demand in the United States will grow steadily for the remainder of the year."

The forum, held at the Chicago Board of Trade, was hosted by Dow Jones Indexes-AIG Financial Products Corp.

http://www.reuters.com/article/reutersEdge/idUSN3124742320070731

Flynn said crude oil prices, which have soared almost $8 per barrel from $70 in early July basis New York crude futures to nearly $78 on Thursday, would peak at $85 by end of 2007.

"I think crude was undervalued based on the rest of the world markets," he said, adding that continued growth of world economies should add about $10 per barrel per year to the price of crude oil and that the market should reach roughly $100 per barrel at the end of 2009.

Flynn also said gasoline prices were currently undervalued and would rise to match crude oil prices by the end of 2007.

Tom Pawlicki, precious metals and energy analyst for MF Global said gold would remain strong and peak at "$700 by year-end and potentially $730 by year-end or early next year."

Seasonal buying of gold including holiday purchases in India, the world's largest consumer of jewelry, will keep the gold market strong, Pawlicki said. Also, "commercial buying has returned and weakness in the dollar is a positive for gold."