Singapore (Platts)--10Jun2013/834 am EDT/1234 GMT

Crude oil prices are expected to drift lower and stabilize around $80/barrel by 2015-2016, industry analysts said Monday, adding that in the near term, however, prices are expected to stay around $100/b.

"The house of oil has a $120/b ceiling and a $80/b floor. We have been staying at the high end for many, many years and now we are sliding towards the floor," Fereidun Fesharaki, chairman of Facts Global Energy, said at his Crystal Ball session at the Asia Oil & Gas Conference in Kuala Lumpur.

"The crystal ball says that sometime around 2015-2016, we will come down to the $80-85 range. We can't go lower than that because if we go lower than that, a lot of unconventional will stop manufacturing," he said.

Once oil prices hit $80/barrel, a lot of projects have to be re-examined, Fesharaki said, adding that "many LNG projects which have run forward today, would not have run forward had we seen and looked at the world of $80/b oil."

Wood Mackenzie Chairman David Morrison told delegates that oil prices are unlikely to see a dramatic collapse, but they may drift lower and if that happens some of the projects may get deferred.

"When you think of fundamentals, there are a number of downward pointers. Perhaps, the most important of these is that a combination of anaemic demand and increasing US output means that OPEC spare capacity is set to rise," Morrison said.

The US has been producing around 7 million b/d for the last several years, but is set to produce 12 million b/d by the end of this decade. "That is the equivalent of adding two Nigerias or two Venezuelas. This is an absolutely fundamental change -- the US will become the world's largest oil producer," he said.

According to Wood Mackenzie, OPEC's spare capacity is set to rise from around 2 million b/d in 2010 to over 6 million b/d by 2020.

"This [OPEC spare capacity] is not a very pretty picture," said Morrison. "It raises very serious questions about OPEC behaviour and of course the oil price in particular for the two top OPEC producers -- Saudi Arabia and Iraq."

Morrison said oil prices could go lower to around $80/barrel by 2015-2016.

David Hewitt, co-head oil and gas equity research at Credit Suisse, echoed a similar sentiment, saying his bank does not see a fundamental effect of US shale oil capacity in 2013.

"For the second half of the year, we are at $115, we don't see a significant weakening," Hewitt said.

Citi Investment Research's senior associate of Commodities Research, Eric Lee, said the amount of supply coming online in the coming years would likely push oil prices down to a "$90/b ceiling by the end of the decade."

"At $90 you can really get a huge amount of new production that's coming online -- and at those prices you can bring on the kind of supply to keep prices at that level," he said.

Citi expects Brent to average $104/b this year. "There's a bit of upside going into the summer so our Q3 outlook is somewhere around $105/b -- and next year moving down to the lower nineties."

The bank sees the spread between Brent and WTI narrowing significantly going forward due to new US pipelines coming online and take-or-pay contracts negotiated between US producers and buyers.

--Mriganka Jaipuriyar, mriganka.jaipuriyar@platts.com; Song Yen Ling, yenling.song@platts.com

--Edited by Jonathan Fox, jonathan.fox@platts.com

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