PsychoticDan
05-10-2006, 19:42
Oil Analysts Raise 2007 Forecasts as Demand May Outpace Supply (http://www.bloomberg.com/apps/news?pid=20601087&sid=aD2mdsplVneY&refer=home)
By Mark Shenk
Oct. 3 (Bloomberg) -- Oil analysts are raising their price estimates for next year in anticipation of increased demand that may outpace the development of new deposits.
Crude oil will average $64 a barrel in New York in 2007, according to the median forecast of 29 analysts surveyed by Bloomberg News last week. That's $2 higher than predicted at the end of the second quarter. Analysts failed to predict the rise in oil throughout a five-year rally during which prices tripled.
``We see a very tight market continuing into next year,'' said Kevin Norrish, a director of commodities research for Barclays Capital in London. Barclays expects oil next year to average $76.70 a barrel, the highest forecast in the survey.
``The recent fall in prices is due to short-term factors,'' he said in an interview. ``We're looking for fairly strong global growth, and we don't see capacity expanding by much.''
Benchmark oil futures touched a record $78.40 a barrel July 14 on the New York Mercantile Exchange on concern that fighting between Israel and Hezbollah in Lebanon would spread through the Middle East, the source of almost a third of the world's oil. Prices fell after fighting ended in Lebanon and the Gulf of Mexico storm season passed without a repeat of last year's hurricanes, which crippled oil production and refineries. New York crude ended yesterday at $61.03 a barrel.
Oil's climb from less than $20 a barrel at the end of 2001 has been driven by the failure of producers to generate new supplies fast enough to keep pace with rising demand, especially in China. Analysts are betting that trend will continue.
They forecast that oil would be $58 a barrel at the start of 2006, according to the median in Bloomberg's survey last December. So far, crude oil has averaged $68.26, higher than any prior year.
Supply Increases
``We just haven't seen dramatic increases in supply,'' said James Rollyson, an analyst at Raymond James Financial Inc. in Houston. Raymond James is predicting $70 oil next year after forecasting $58 at the beginning of this year.
Oil consumption worldwide climbed 9 percent to an average 83.8 million barrels a day between 2000 and 2005, led by China and the U.S., according to the U.S. Energy Department. Global oil supply rose 8.6 percent to 84.5 million barrels.
Prices surged during the first half as Iran, the fourth- largest oil producer, pushed ahead with nuclear fuel enrichment, heightening tensions with the U.S. Iran has the world's second- biggest proved oil reserves and borders the Strait of Hormuz, a narrow waterway through which nearly a quarter of the world's oil is shipped.
Talks in Berlin between Iran and European Union officials aimed at breaking the deadlock over the atomic program produced some progress, Iran's chief nuclear negotiator Ali Larijani said on Sept. 28.
``It's been relatively cool on the political front recently, but odds are this won't continue through next year,'' said Rollyson at Raymond James.
Oil will average $65.50 a barrel in the fourth quarter, according to the median estimate in the survey. Analysts in June said oil would average $67.65 a barrel during the third quarter. Prices averaged $70.60 during the past three months, a record.
Economic Growth
Strategists who forecast a drop in prices next year say a slowing U.S. economy will coincide with increased output. U.S. economic growth slowed to a 2.6 percent pace in the second quarter, 3 percentage points lower than the first three months of the year, the Commerce Department said Sept. 28.
``We're very pessimistic about the U.S. and global economy next year,'' said Eoin O'Callaghan, an analyst with BNP Paribas SA in London who expects oil to average $59.80 next year. ``The last four years, there's been limited spare capacity, making us sensitive to disruptions and geopolitical risk.''
Rising fuel stockpiles in the U.S., which is responsible for 25 percent of global energy use, helped cause the decline in prices in the third quarter.
Spot prices are cheaper than futures for oil delivered later in the year, a market condition called ``contango.'' This has led to increased inventories, but it may end in coming months, said Adam Sieminski, chief energy economist at Deutsche Bank Securities AG in New York. He expects oil to average $61 a barrel in 2007.
The average price for Brent crude, traded on the London- based ICE Futures exchange, is likely to be $61 a barrel in 2007, according to the median forecast. I guess most analysts are finaly starting to wake up. I've watched them year aftr year say, "Oil prices are going to fall, oil prices are going to fall," while they went up and up and up...
By Mark Shenk
Oct. 3 (Bloomberg) -- Oil analysts are raising their price estimates for next year in anticipation of increased demand that may outpace the development of new deposits.
Crude oil will average $64 a barrel in New York in 2007, according to the median forecast of 29 analysts surveyed by Bloomberg News last week. That's $2 higher than predicted at the end of the second quarter. Analysts failed to predict the rise in oil throughout a five-year rally during which prices tripled.
``We see a very tight market continuing into next year,'' said Kevin Norrish, a director of commodities research for Barclays Capital in London. Barclays expects oil next year to average $76.70 a barrel, the highest forecast in the survey.
``The recent fall in prices is due to short-term factors,'' he said in an interview. ``We're looking for fairly strong global growth, and we don't see capacity expanding by much.''
Benchmark oil futures touched a record $78.40 a barrel July 14 on the New York Mercantile Exchange on concern that fighting between Israel and Hezbollah in Lebanon would spread through the Middle East, the source of almost a third of the world's oil. Prices fell after fighting ended in Lebanon and the Gulf of Mexico storm season passed without a repeat of last year's hurricanes, which crippled oil production and refineries. New York crude ended yesterday at $61.03 a barrel.
Oil's climb from less than $20 a barrel at the end of 2001 has been driven by the failure of producers to generate new supplies fast enough to keep pace with rising demand, especially in China. Analysts are betting that trend will continue.
They forecast that oil would be $58 a barrel at the start of 2006, according to the median in Bloomberg's survey last December. So far, crude oil has averaged $68.26, higher than any prior year.
Supply Increases
``We just haven't seen dramatic increases in supply,'' said James Rollyson, an analyst at Raymond James Financial Inc. in Houston. Raymond James is predicting $70 oil next year after forecasting $58 at the beginning of this year.
Oil consumption worldwide climbed 9 percent to an average 83.8 million barrels a day between 2000 and 2005, led by China and the U.S., according to the U.S. Energy Department. Global oil supply rose 8.6 percent to 84.5 million barrels.
Prices surged during the first half as Iran, the fourth- largest oil producer, pushed ahead with nuclear fuel enrichment, heightening tensions with the U.S. Iran has the world's second- biggest proved oil reserves and borders the Strait of Hormuz, a narrow waterway through which nearly a quarter of the world's oil is shipped.
Talks in Berlin between Iran and European Union officials aimed at breaking the deadlock over the atomic program produced some progress, Iran's chief nuclear negotiator Ali Larijani said on Sept. 28.
``It's been relatively cool on the political front recently, but odds are this won't continue through next year,'' said Rollyson at Raymond James.
Oil will average $65.50 a barrel in the fourth quarter, according to the median estimate in the survey. Analysts in June said oil would average $67.65 a barrel during the third quarter. Prices averaged $70.60 during the past three months, a record.
Economic Growth
Strategists who forecast a drop in prices next year say a slowing U.S. economy will coincide with increased output. U.S. economic growth slowed to a 2.6 percent pace in the second quarter, 3 percentage points lower than the first three months of the year, the Commerce Department said Sept. 28.
``We're very pessimistic about the U.S. and global economy next year,'' said Eoin O'Callaghan, an analyst with BNP Paribas SA in London who expects oil to average $59.80 next year. ``The last four years, there's been limited spare capacity, making us sensitive to disruptions and geopolitical risk.''
Rising fuel stockpiles in the U.S., which is responsible for 25 percent of global energy use, helped cause the decline in prices in the third quarter.
Spot prices are cheaper than futures for oil delivered later in the year, a market condition called ``contango.'' This has led to increased inventories, but it may end in coming months, said Adam Sieminski, chief energy economist at Deutsche Bank Securities AG in New York. He expects oil to average $61 a barrel in 2007.
The average price for Brent crude, traded on the London- based ICE Futures exchange, is likely to be $61 a barrel in 2007, according to the median forecast. I guess most analysts are finaly starting to wake up. I've watched them year aftr year say, "Oil prices are going to fall, oil prices are going to fall," while they went up and up and up...