More spikes of global oil prices touching $US100 ($NZ135) a barrel are predicted during the next three years, but they should generally stay within present levels above $US70 to $US80 a barrel for the next 15 months, according to separate research from broking firms Craigs Investment Partners and Forsyth Barr.
As New Zealanders enjoy annual summer breaks, the cost of petrol at the pump will be highlighted yet again, although the recession is expected to keep more people closer to home this year.
Last week saw the first 4c hike per litre this year, to almost $1.70, with BP expecting prices to rise again soon to reflect increasing refinery costs in Singapore.
On the flip-side, there may be investment opportunities as oil explorers, producers and refineries claw back some profitability out of the rising prices.
It appears the extent of the global economic recovery from almost two years of recession will determine how much New Zealanders will be paying at the pump, plus the strength of the New Zealand dollar.
In keeping with the complex dynamics that cause oil-price volatility, what could or should be paid at Kiwi pumps will be further compounded by the weakened US dollar, which its government is doing little to turnaround, and stock-market speculators are again picked to add fuel to the fire during times of high prices.
Oil hit a record $US147 in July 2008, propelling New Zealand petrol prices to records near $2.20 a litre, saved only by bigger hikes by the high New Zealand dollar at the time which dampened the prospect of even larger increases.
With an exchange rate at US74c, a $US100 barrel would cost $NZ135 while at US60c it would equate to $NZ156 a barrel.
Craigs broker Peter McIntyre forecast a recovery in oil demand during the next two to three years as growth resumed in world gross domestic product output.
Craigs was forecasting global oil prices for the next 12 to 15 months would stay around present levels in the low to upper $US70s.
Forsyth Barr broker Suzanne Kinnaird said long-term oil prices were recently revised upwards, from $US76 to $US80 a barrel, which reflected the weakening US dollar.
"Cheap money, a weak US dollar and increased risk tolerance seem to be the main drivers of the price of oil, but it is very tough to capture in any formal forecasting process," she said.
Oil prices for 2010 were forecast to be up by 7% and in the long term by 6% in 2013, while demand is being driven by non-OECD (Organisation for Economic Co-operation and Development) countries and China, which is expected to post a 9% growth in gross domestic product next year.
"Inevitably, the oil demand picture is improving as we pass through the worst of the financial crisis.
We expect China's oil demand to increase by 6.7% in 2010," Ms Kinnaird said.
Mr McIntyre cautioned prices could briefly fall to below $US70 or spike above $US100 during the next three years.
Last week, oil rose $US2 to hit an almost three-month high of more than $US81 as winter storms hit many northern hemisphere countries and temperatures plummeted, driving up demand for heating fuels.
From about mid-2011, rising oil demand was expected to push prices beyond $US80 per barrel towards $US95, including spikes above $US100.
The profit margins of refineries were "scraping the bottom of the barrel" at present as demand remained weak because of the global recession.
A recovery during 2010 was not expected because the refineries would be holding high inventories, which would restrict margin growth.
However, countries emerging from recession in 2011 would assist the refineries in increasing their profit margins, Mr McIntyre said.
Asia, and China in particular, was an example of increased demand which was underpinning increasing corporate activity, such as a proposed Exxon Mobil takeover target in the United States.
Mr McIntyre said several petroleum-related stocks were worth considering for investors.
ASX-listed Woodside Petroleum announced in mid-December it intended raising $A2.5 billion ($NZ3.1 billion) equity in 2010 to further develop its liquefied natural gas developments for Asian consumption, which could see Australia become the largest lng exporter.
Major shareholder Royal Dutch Shell has said that to maintain its 34% Woodside share it would invest $A862 million in the issue.
Similarly, for PetroChina, there is expected to be improved gas pricing and rising oil prices, which have prompted a "buy" recommendation by Craigs, underpinned by a strong balance sheet and potential for acquisitions.
Mr McIntyre was cautionary there was potential for refinery margins to be squeezed and off-set the crude price gains, but he forecast "sharp earnings growth" in 2010 of 33%, steadying to 5%-7% during 2011-12.
Ms Kinnaird highlighted that oil production from Iraq was a fundamental factor yet to have an impact on the market, as redevelopment contracts struck in July were now moving toward realisation"By 2015, this could mean 3-5 million barrels a day of comparatively cheap crude oil [could be available] for the market."
If the oil industry is unable to develop capacity quickly enough then prices would have to go beyond $US100 a barrel to depress demand and balance the market, she said.
Companies that Forsyth Barr are recommending include Australian stocks Santos and Origin Energy in the "core bluechip sector", and Australian Worldwide and Beach Petroleum as exploration exposures, with their existing core earnings lowering their overall risk profile, Ms Kinnaird said.
Craigs' Australian stock picks for oil companies are similar, with Oil Search, which is a Papua New Guinea explorer and developer of oil and gas assets, heading its list of picks, aided by expectations of cost savings in green-field development rising from 25% to 40%.
Both brokers' financial disclosure documents are available on request.
