NEW YORK: Brent crude will hover around $100 a barrel for the next two years, a Reuters poll showed after analysts slashed their forecasts for the oil price to reflect ample supply and sluggish economic growth.
Brent crude oil will average $107.60 per barrel this year, Reuters monthly oil price survey for April predicted yesterday, down from $110.80 in last month’s poll and below last year’s average price of $111.70.
Slower-than-expected growth data from the United States and China, the world’s biggest oil consumers, in the past month has tempered the outlook for oil demand while global output has kept rising, especially from US shale oil projects.
Brent has lost more than 6 percent since the start of April and has averaged close to $110.40 so far in 2013. The poll forecasts the downtrend in prices will continue next year, with Brent averaging $106.60 in 2014 before recovering only very slightly to $106.70 in 2015.
Reuters surveyed 27 oil analysts at banks, brokerages and consultancies. Of the 25 analysts polled in both March and April, 17 reduced their forecasts.
“The ongoing rise in oil production, combined with the weak economic recovery will keep the lid on oil prices,” ABN Amro energy economist Hans van Cleef said. “Overall, I think weak demand and ample supply will, in the end, result in lower average oil prices in 2013 and this trend will continue in 2014 and 2015,” he said.
US light crude oil, also known as West Texas Intermediate or WTI, should outperform European benchmark Brent after having underperformed it in the past years.
The poll forecast WTI would average $94.60 a barrel in 2013, down from $95.70 in last month’s poll but slightly above the 2012 average of $94.15.
That will help narrow the gap between WTI and Brent on the back of rising US demand and improving US pipeline infrastructure, which will help deliver oil to refining hubs more quickly.
Chris Tevere, an analyst at GAIN Capital, expects US crude oil futures to average $92 a barrel in 2013 and $96 in 2014.
Brent touched a 2013 low of $96.75 on April 18 but analysts said it should recover back above $100 a barrel by the third quarter.
“While we do not rule out further weakness in the near term, we do not see prices acclimatising below the $100 per barrel mark past Q2,” Barclays analyst Miswin Mahesh said.
Two analysts forecast Brent prices would average below $100 in 2013 compared with one in the previous month’s poll.
Thirteen analysts forecast Brent would average more than $108.40 in 2013, the median of the forecasts, compared with 19 in last month’s poll.
Raiffeisen Bank International had the highest forecast for Brent in the poll at $114.30 for 2013, while Citigroup had the lowest at $90 a barrel.
Reuters
