By Soren Billing
Kuwaiti investment bank predicts price rebound next year and continuing in 2011.
Oil prices will cross the $100 mark next year and stay there, Kuwaiti investment bank Markaz predicted on Tuesday.
Crude will average above $100 per barrel in 2010 and 2011 following a supply crunch prompted by a slowdown in investment due to a lower price scenario this year, coupled with the credit crisis, Markaz said.
“We believe that in the short term, the current spare capacity coupled with a decline in oil demand, has depressed prices, but is unlikely to remain so for much longer,” a team of analysts wrote in a note to investors.
Markaz sees an average oil price of $45 per barrel in the first half of this year rising to $60 in the second half.
Many oil producing countries, though not all, are well placed to stick to production cuts and further reduce supply due to the high oil prices of the last five years.
Markaz also believes that the uncertainty and high volatility of equity markets will push more investors into speculative oil investments.
“Many traders are rushing to take advantage of the sharp correction by using crude tankers as a medium to store oil on the sea, rather than transport,” the analysts wrote.
“With Spot Crude trading around $40 and the NYMEX 6-month futures price of $53, a trader can take delivery of crude today, sit on it for six months and potentially make a 20+ percent return.”