Jason Feer, Vice President & Singapore Bureau Chief of Argus Media said a lot of developments in Europe, Nigeria and the Middle-East indicate rising prices in crude. He told CNBC-TV18 that going into summer, there may be low inventories and high demand, which indicate stronger prices.

Excerpts from CNBC-TV18’s exclusive interview with Jason Feer:

Q: What is the scene looking like for crude? Do you think the steady inching on continues? There are a lot of brokerages who are calling for USD 150 per barrel very soon.

A: We try not to put price a forecast out of the market. But if we look at the rates, they are certainly pointing to the upside. So, in terms of political developments, a lot of the developments we see in Europe, Nigeria and the Middle East point to stronger prices.

If you look at the United States, even though demand is dropping, US inventories are looking good. We are expecting to see surprisingly strong growth in demand, particularly from China, which many people have been expecting to slow down and is not showing any signs of that as yet. So, going into summer, we are seeing fairly low inventories and fairly high demand. So, that probably points towards stronger prices.

Q: A lot of the Asian demand has continued because Asian economies and governments have taken fiscal steps to step in and not let consumers face the brunt of oil prices. How long can they continue with this kind of a fiscal cushioning? At what levels can crude genuinely find the pressure of consumers not being able to bear the burden?

A: Across Asia, it is a pretty entrenched system or other mechanism where consumers do not feel the full impact of higher oil prices and do not alter their behaviour accordingly.

For example- in the United States and other countries where you do not have subsidies, demand is beginning to fall or at least leveling out. That is purely a function of just higher prices. The right question is whether the governments in Asia can continue to foot the bill. It is becoming very expensive for China. Malaysia is already beginning to talk about phasing out subsidies or changing its subsidy structure and you see same conversation is going on in Indonesia.

The issue is that these costs have the potential to cause political instability. So, a lot of the governments in the region are fairly cautious when it comes to trying to step away from subsidies.