Oil output set to peak, but no fuel shortage-UBS
Oil production looks set to peak in the mid-to-late 2020s, but the decline will be offset as high fuel costs accelerate the quest for other energy sources, notably natural gas, UBS said in a study published on Wednesday.
Advocates of the peak oil theory that supplies are close to their maximum levels say it is gaining credence in the investment community.
"The cry of peak oil production has been made several times and on each of these occasions the prediction was incorrect," the UBS report said.
"Exactly when it will occur is very difficult to estimate ... However, the fact that consumption is outstripping new discoveries by more than 400 percent suggests that further increases in global reserves may be nearing an end."
It will take time for high prices to aid the shift to alternative energy, including renewables and natural gas.
Oil consumption will remain strong in the near term, driven by a growing global population and economic growth in nations such as China and India.
But UBS predicted natural gas, still in its early stages of becoming a globally-traded commodity, would eclipse oil production by 2030 or even sooner.
For those seeking to capitalise on accompanying price movements, the Swiss investment bank, which is the world's largest wealth manager, advised investors to take an active rather than passive investment approach.
That would mean using hedge funds, which play the market from long and short positions, rather than opting for an index, or basket of commodities, which tends to be long only.
"Given the changing influences on commodity prices, investors may want to engage in more active investment strategies in this asset class," the bank said.
"In this case, commodity hedge funds may provide a valuable alternative to a passive index-orientated investment in commodities."