By Koustav Samanta and Dmitry Zhdannikov
May 24 (Reuters) – An increasing number of forecasters
expect Brent crude to average less than $100 a barrel next year
because of downward pressure from Europe’s debt crisis, a
slowdown in Chinese economic growth and hopes for a resolution
of the Iranian nuclear crisis.
Reuters’ monthly oil poll, based on forecasts from 37
analysts, forecasts Brent averaging $115.10 a barrel in
2012, down $2.20 from the April poll – the steepest
month-on-month cut in the poll over the past year.
In 2013, Brent is seen averaging $113.20 a barrel, also a
cut of $2.20 from April. A third of analysts have reduced their
forecasts after a fall in prices from $125 at the beginning of
April to just over $105 now.
While they remain in a minority five analysts are now
calling for a sub-$100 average next year, three more than in
last month’s poll.
“The crisis in the euro zone looks set to enter a new and
much more dangerous phase. This could involve not just sovereign
defaults in the periphery but also the potential exit of one or
more countries from the currency union altogether,” said Capital
Economics analyst Julian Jessop.
Jessop added that another catalyst for the next big step
down in oil prices could be an easing of sanctions on Iran.
Capital Economics has the lowest forecast in the poll, calling
for Brent to average $104 in 2012, $85 in 2013 and $80 in 2014.
Other analysts that are forecasting oil to average less than
$100 a barrel in 2013 include the Centre for Global Energy
Studies (CGES), Nomisma Energy, Raymond James Ltd., and
Santander. Chevreux is forecasting oil to average exactly $100
next year.
Brent to date this year has averaged $117.60.
An OECD warning on Tuesday that the euro zone debt crisis
could derail a shaky global economic recovery renewed concerns
over global oil demand.
“The macroeconomic risk coming from Europe will need to
dissipate before we see crude oil market fundamentals dominate
pricing again,” said Michael Creed from National Australia Bank.
A quarter of respondents still saw Brent prices at
or above $120 a barrel in 2012 and almost half of respondents at
or above $120 next year.
The highest forecast for this year belongs to Societe
Generale at $127 a barrel. For next year Goldman Sachs at $130
and Credit Suisse at $132.5 are the most bullish forecasters,
Strong demand in Asia and shrinking Saudi spare production
capacity often cited as the main bullish factors.
“While the euro area crisis, together with softer Chinese
data, is likely to heavily temper the short-term upside for oil
prices, it does not yet, in our view, presage a more dramatic
sustained shift downwards in prices,” Barclays analysts Paul
Horsnell and Amrita Sen said.
“Considering the world’s central banks’ actions to stimulate
the economy – even if the tension in the Middle East fades,
there is still high upside risk in the oil market as inflation
starts to bite,” said Thorbjoern Bak Jensen from Global Risk
Management.
The poll showed that U.S. crude WTI will average
$103.10 per barrel, down $2.50 from $105.60 in April.
WTI’s discounts to Brent
should narrow to $7 a
barrel next year from $12 this year as the Seaway pipeline
becomes operational, analysts said.
The Seaway pipeline began pumping crude from Cushing,
Oklahoma, oil tanks to the heart of the U.S. refining industry
in Houston last Saturday, marking a historic shift in the way
oil flows across the United States.
“A significant narrowing should be on the cards once the
pipeline capacity linking Cushing to the Gulf Coast reaches
400,000 b/d,” said Sebastian Wehrle of JBC Energy.
(Polling and additional reporting by Soma Das in Bangalore,
Dmitry Zhdannikov in London; Editing by Richard Mably and Alison
Birrane)
