Oil forecast to rise above $90 in 2011: Poll
Oil prices will average slightly more than USD 90 a barrel this year as Chinese-led demand provides support and high inventories mean any gains to the psychological USD 100 mark will be short-lived, a Reuters poll found on Tuesday.
January 25, 2011 / 17:09 IST
Oil prices will average slightly more than USD 90 a barrel this year as Chinese-led demand provides support and high inventories mean any gains to the psychological USD 100 mark will be short-lived, a Reuters poll found on Tuesday.
Compared with last month's survey, price forecasts were more than USD 4 higher.It was the fourth revision higher in a row and follows a sustained price rally that took US and Brent crude futures to 27-month highs earlier this month. Brent climbed to USD 99.20, while US crude hit a peak of USD 92.58.The rally has been triggered by US quantitative easing and a weakened dollar as well as expectations of stronger growth, led by China and other emerging markets.Still the landscape is very different from that of 2008, when supply struggled to keep pace with demand and oil prices shot to a record of USD 147.27 before crashing lower."I think prices above the USD 100 mark will not be sustainable as inventories are still very high," said Frank Schallenberger, head of commodity research at Germany's LBBW.He saw the potential for prices to drop around USD 10 in the next few weeks but also cited the prospect of 4.5% growth in global GDP this year and noted emerging markets had appetite for "more and more energy".Any strength in the oil market will be focused on European Brent futures, which since August last year have sustained an unusual premium to US crude, reflecting storage issues in the United States and dwindling North Sea supplies.The survey of 36 analysts found Brent would average USD 91.17, up from the last poll's USD 86.85 forecast, while US crude was seen at USD 90.40, up from the USD 86.26 forecast in December.US inventories still hereInventories in the United States, the biggest oil consumer, have fallen from record levels hit last year, drawn down by an exceptionally harsh northern hemisphere winter, but they are still above the five-year average.The latest data on US stockpiles will emerge on Tuesday at 2130 GMT from industry group the American Petroleum Institute and will be followed on Wednesday by government data. Analysts predict a rise in inventories. So far, the Organization of the Petroleum Exporting Countries producer group has said there is enough crude on the market and no need for it to pump any more oil, even though some analysts have voiced concerns that prices could be high enough to undermine fragile economic growth.Top oil exporter Saudi Arabia on Monday stopped short of promising extra oil, although giving a higher figure for demand growth this year than some other forecasters. Saudi oil minister Ali al-Naimi said Asia -- particularly China and India -- would lead the increase in use but he saw no rapid rally this year."I expect prices to continue to be stable at last year's rates (levels)," he said. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
