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Wed 29 Aug 2012 05:39 PM

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Analysts raise oil price forecasts for 2012, 2013

Poll says price rise likely amid supply concerns, expectations of further economic stimuli

Analysts raise oil price forecasts for 2012, 2013

Analysts have raised their oil price forecasts for this year and 2013 due to supply concerns and to expectations for a further round of monetary policy stimulus, which could improve prospects for economic growth, a Reuters poll found.

The Reuters monthly oil poll, based on forecasts from 28 analysts, forecast Brent at an average of $109.50 a barrel in 2012, up $1.20 from the figure in the July poll.

Brent has averaged about $112 per barrel so far this year, up from $111 in 2011.

"We have revised our near-term forecasts higher to reflect the ongoing support from hopes of global policy stimulus and fears over tensions in the Middle East," Capital Economics analyst Julian Jessop said.

"However, these drivers should fade by the end of this year, to be replaced by renewed concerns about the world economy and the future of the euro," he added.

The poll forecast that Brent would slip to an average of $106.10 in the third quarter of 2012 and $106.50 in the fourth quarter.

For 2013, Brent was forecast to average $107.20 a barrel, a rise of 70 cents from the July estimate. Only three out of 26 analysts expected an average Brent price below $100 in 2013.

The poll predicted US light crude oil would average $95.90 per barrel in 2012, up 50 cents from the July figure. For 2013, the poll forecast $99.50 per barrel, up 60 cents from the previous month.

"Geopolitics and increased liquidity poured into the system from central banks should pose positive elements for oil prices, but fundamentally the market will not look strong (in 2013)," DNB analyst Torbjoern Kjus said.

Kjus said he believed oil prices would start to trend lower from 2013 and continue that trend towards 2020.

The rise in the oil price to $117 per barrel in August has been due to temporary special factors and not to any tightening of the market, Commerzbank analyst Carsten Fritsch said.

"The market will also remain oversupplied in the coming quarters if OPEC production stays at its current level of more than 31 million barrels per day," Fritsch said.

Jessop, who has the lowest Brent forecast for 2012 at $102 per barrel, said the recovery in oil prices since June has probably been boosted by an overly rosy view of the prospects for the world economy, which also has been reflected in a rebound in global equity markets.

Raymond James had the lowest forecasts for 2013 at $80 for Brent and $65 for WTI.

"With demand expected to decline at the tail end of U.S. and EU driving season in September, we should see a decline in oil prices. If it continues to rise, the possibility of release of strategic crude reserves by the United States is high," Natixis analyst Abhishek Deshpande said.

Goldman Sachs forecast the highest prices, putting Brent at $120 in 2012 and $130 in 2013.

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