Analysts forecast drop in oil price

Analysts forecast drop in oil price

Azerbaijan, Baku, June 24 / Trend , A.Badalova/

Oil prices are expected to retreat back to the high $50s during the summer as the US dollar strengthens from recent lows, experts of the British Cambridge Energy Research Associates (CERA) consulting association believe. 

CERA projects West Texas Intermediate (WTI) prices to average $57 in third quarter 2009 and $55 for the year. We expect the recovery to advance in 2010, supporting average WTI prices of $65 per barrel.

"Since March equity markets around the world have rallied, and crude oil prices have followed suit despite bearish oil demand and supply fundamentals. An important component of the crude price rally is based on the anticipation of a quick and strong economic recovery, and thus an increase in global oil demand," the CERA report posted on its official Web site said.

CERA projects that world oil demand will shrink by an estimated 2.0 million barrels per day (mbd). OECD countries are expected to account for 1.8 mbd of this contraction, with most emerging markets declining as well. Small pockets of growth are expected in the Middle East and China. Global oil demand is expected to increase by 1.2 mbd in the second half of 2009 relative to the first half.

Analysts of the Goldman Sachs investment bank believe that the oil price may increase to $85 dollars per barrel by late 2009. The bank forecasts that the price will up to $95 per barrel by late 2010.

The British consulting company Economic Research Capital Economics forecasts the average oil price (Brent) in 2010 and 2011 will be $50 per barrel. In the third quarter of 2009, the price will be $75 per barrel and $60 - in the fourth.

Analysts of the British consulting company believe that the bounce in commodity prices is likely to be sustained while the dollar remains under pressure and expectations of recovery continue to build. But disappointment at the strength of the economic expansion should take the heat out of the latest rally. Following a peak of around $75 p/b later this summer, we expect the price of crude oil to ease back to $50 p/b during 2010.

Under new forecasts of the World Bank, an average price of oil in 2009 will amount to $55 per barrel compared to $47.8 previously forecasted by the bank.

The U.S. State Energy Information Agency predicts an average price of WTI will amount to $58.7 in 2009 and $67.42 per barrel in 2010.

After two-day drop, oil prices on the world markets increased to almost $2 on June 23. As a result of auctions on the New York Mercantile Exchange, the August futures on WTI increased by $1.74 dollars and reached $69.24 per barrel. The cost of Brent futures on the London Stock Exchange rose by $1.82 and was $68.8 per barrel.

Earlier, the head of OPEC, Energy Minister of Angola Botelho de Vasconcelos said that the cartel aims to reach the price to $75 per barrel by late 2009.

Summary table of oil price forecasts:

Company

2009 with $/barrel

2010 with $/barrel

CERA

55 (W)

65 (W)

EIA

58.7 (W)

67.42 (W)

Goldman Sachs

85 (А)

95(А)

Capital Economics

75 (B) (Q3) - 60 (B) (Q4)

50 (B)

World Bank

55 (А)

A - average price for major oil brands 

W - WTI

B - Brent 

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