Sydney (Platts)--12Sep2012/511 am EDT/911 GMT

Consultancy Wood Mackenzie believes crude oil prices have already peaked this year, barring any unexpected supply disruptions, but also expects the market to remain above $100/barrel until 2013, Alan Gelder, its head of downstream research, said Wednesday.

"Although we won't see demand growth like that of 2009-2010, global oil demand growth will help keep prices above $100/b in the near term," Gelder told the Asia Pacific Petroleum Conference in Singapore. "This is even if healthy non-OPEC production and OPEC spare capacity growth signal prices on the downward trend."

Wood Mackenzie is still expecting robust growth in oil consumption by 2013, with demand increasing 1 million b/d to 1.5 million b/d, driven by the transportation, petrochemicals and power sectors in countries such as Indonesia, China, Japan and India. These four markets will account for a major share of Asian demand growth. But there are risks to the forecast, Gelder added.

"Price influencers have moved beyond fundamental market forces and are now driven by global economic uncertainty, geopolitical issues and changes to supply outlooks," he said. "Economic events such as a eurozone recession could decrease the demand for crude oil thereby weakening prices. Geopolitical factors can affect major supply countries such as Iran, Syria, Sudan and Iraq, which has an impact greater than the projected growth in US tight oil production."

The other major trend in the market is a narrowing of light-heavy crude differentials, as the startup of new complex refineries increases demand for heavy crudes and as the tight oil play in the US boosts the supply of light sweet crudes, according to Wood Mackenzie.

There is also likely to be increased pressure on Asian governments to deregulate, creating downward risk over time to oil demand growth in key markets such as China, India, Indonesia and Malaysia.

"High oil prices will increase the subsidy burden on many governments in Asia which will increase the pace of deregulation," Sushant Gupta, Wood Mackenzie's senior Asian downstream analyst told the conference.

Wood Mackenzie estimated that in 2011, refining and marketing companies in India, China, Malaysia, Indonesia, Taiwan and Vietnam made a combined loss in the range of $70 billion to $80 billion due to government intervention in controlling consumer prices. That would put considerable pressure on governments to deregulate markets whatever way they could and let market forces determine consumer prices, it said.

"Income levels, consumer behavior and inter-fuel competition will ultimately drive the impact of deregulation on oil demand," Wood Mackenzie said. For example, in India, subsidies distorted the demand for gasoil, with diesel cars showing strong growth in sales and gasoil even replacing fuel oil to generate power, it said.

"Oil prices will remain high enough to make the subsidies unsustainable for many economies and will lead to eventual deregulation," Gupta said.

--Christine Forster, christine_forster@platts.com --Edited by Elston Soares, elston_soares@platts.com

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