By Ikuko Kao
Analysts raise oil prices outlook for remainder of 2008 from $90.5 per barrel in late March, poll finds.
Oil will climb to a record average above $91 this year and the US government now expects US crude to average over $100 in 2008, an updated poll of analysts by newswire Reuters showed on Wednesday.
US government body the Energy Information Administration (EIA) and Citigroup have raised their forecasts this week and UBS did so late in March.
Reflecting the changes, Reuters monthly survey of analysts put the consensus forecast for US crude futures in 2008 at an average of $91.24 a barrel, up from $90.55 in the previous poll in late March.
For 2008, EIA raised its forecast to $100.61 a barrel from the $94.11 projected a month ago, raising its full-year price forecast for West Texas Intermediate crude oil, the US benchmark, to above $100.
A slowing US economy is not enough to put the brakes on soaring global oil demand, the EIA said in its monthly oil market report on Tuesday.
Five bank analysts currently forecast US crude will average above $100 this year.
German bank Landesbank Baden-Wuerttemberg has the highest assumption of $107. Four others are Barclays Capital, Merrill Lynch, Societe Generale and Italian bank UniCredit.
Revisions by Citigroup and UBS are more modest. They expect US crude to average $80s.
Citigroup raised its 2008 forecast for U.S. crude to an average $81.96 from the previous $80.
UBS estimated US crude will average $86.96 a barrel, compared with its previous estimate of $85.
US crude and North Sea Brent rose above $100 earlier this year for the first time.
They have remained above $100 most of the time since early March, prompting many analysts to boost their price assumptions.
Analysts said oil prices would remain high because strong demand from emerging markets, such as China and India, would continue.
The recent weakness of the US currency has also prompted investors to shift money to the oil market from shrinking dollar assets.
A weakening dollar also maintains purchase power of non-US currency buyers relatively strong, keeping oil demand from such buyers unaffected by high dollar-denominated prices.
UBS placed higher price assumptions for North Sea benchmark Brent crude. The Swiss bank expects Brent to average $87.58 for 2008.
First Energy Capital also forecast Brent averaging a higher price than US crude as North Sea production has been declining.
The recent poll show analysts expect London's North Sea Brent futures to average $89.79 a barrel for 2008, up from $89.30 in the late-March poll.
The Reuters poll showed prices will peak this year, while US crude prices will stay above $84 through 2010. (Reuters)