A majority of oil and gas executives surveyed by the KPMG consulting firm expect oil prices to fall below $100/barrel by the end of this year because fundamentals do not support prices at current levels, according to Bill Kimble, executive director of KPMG's Global Energy Initiative.

"We don't ask respondents for insights on their opinions but I can offer mine," said Kimble, elaborating on the results released May 9 from this year's KPMG survey of 372 financial executives from oil and gas companies.

Of that group, 55% predicted oil prices below $100 by the end of the year while 21% projected prices in the range of $101 to $110.

KPMG said 44% of the group expect an oil price peak by the end of this year while 39% predicted 2010.

"The combination of traders moving resources into commodities and the weak dollar has had a significant role in the surge in pricing in recent weeks," said Bill Kimble, commenting on the results.

"However," he said, "in addition there are underlying issues in the energy industry, such as escalating energy demand in emerging markets and declining oil reserves, which will continue to contribute to upward pricing pressure for years to come."

Kimble said traders have moved out of real estate lending and grown active in commodities such as oil to further scramble the picture on oil prices.

"Markets don't support this price," said Kimble, agreeing with the survey. "Demand will adjust this summer and we'll see prices coming back down."

Despite that belief in an oil price peak this year, 44% of the executives also said they plan to increase their upstream spending by more than 10% in the next year.

Created: May 13, 2008