Oil to trade in $70-75 range

Oil prices are likely to trade in the range of $70-$75 a barrel during the next five years, analysts at Sanford C Bernstein said.

The marginal cost of supply is now about $60 a barrel, Bernstein analysts Neil McMahon and Ben Dell said in a report today. Crude prices are typically 1.1 to 1.2 times that price while limited spare capacity adds an extra increase, they said.

"There also appears little reason to believe that the marginal cost of supply is about to decline, although it may flatten temporarily with a softening oil services market," the report said.

"For pricing to go sub-$60 a barrel then spare capacity would need to top 4 million barrels per day which appears unlikely without a recession."

Even with the higher oil price environment, the Bernstein analysts said there is little reason for major oil companies to merge or break apart.