See Brent hovering around $120-118/bbl: Fat Prophets

David Lennox, analyst, Fat Prophets says one can expect Brent crude oil's price to hover in the range of  USD 118-120 per barrel. It is currently trading at USD 118 per barrel.

Lennox says the demand for crude out of the US is still very soft. He adds that demand for gasoline too is still very weak. "Then, there is the effect that the US is now moving through a Shale boom and we are seeing significant quantities of natural gas and also significant quantities of crude coming into domestic supply," he adds.
On the expectation of the rise in Brent crude prices, Lennox adds that there will certainly be a rise in the price. This, he credits to the fact that there will be demand for crude oil coming out of the US. "Yes, they will be able supply some of that demand themselves, but that is not going to happen as quickly as we think the market is expecting," he adds.

Below is the edited transcript of Lennox's interview to CNBC-TV18. Q: USD 118-120 mark on Brent crude has now been with us for the past three-four weeks. Is this a level we have to get used to or could things get even higher?
A: At this particular point in time, it is probably a level that the world will have to get used to. When you have a look at the demand and supply for crude, we are aware that demand for crude out of the US is still very soft. The recent figures show that the demand for gasoline is still very weak in the United States. Then there is the effect that the US is now moving through a Shale boom and we are seeing significant quantities of natural gas and also significant quantities of crude coming into domestic supply. So, that supply that is coming through the US has to be offset and we are thinking that at this particular point in time Asia has been one of the key offsets. We have seen significant demand increase for China for petroleum products. So, on balance, I guess the two sides of the Pacific are probably weighing each other out and we think that is really keeping the crude price locked into a fairly tight range for the time being. Q: What kind of an upside do you see on Brent crude beyond these USD 118/barrel levels? When we started off the year, we had projections from the likes of World Bank and International Monetary Fund (IMF) etc. where they predicted crude to drop all the way to below USD 100 a barrel as well, but all those projections fell flat in their faces. What kind of an upside are you expecting to see beyond these levels?
A: We are still expecting the price at this particular point in time to rise higher. We do believe that through 2013 we will start to see perhaps more demand coming out of the US. Yes, they will be able supply some of that demand themselves, but that is not going to happen as quickly as we think the market is expecting.