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London: Analysts sharply raised their forecasts for average oil prices this year to above $96 a barrel as a weak dollar, supply disruptions and strong Chinese demand pushed crude's value to unprecedented levels, a survey showed on Friday.
The monthly survey of 33 analysts put the consensus forecast for US crude in 2008 at an average of $96.86 a barrel, up $5.62 from the last poll earlier this month. The average price for oil last year was $72.30.
Oil, which is up about 20 per cent since the start of the year, has set fresh record highs nearly every week for the past couple of months.
"Oil prices are changing so rapidly that oil forecasts are old after just one month," said Adam Sieminski, chief energy economist at Deutsche Bank.
US crude hit an all-time peak of $119.90 a barrel on Tuesday and has averaged above $100 so far this year.
Oil and other dollar-denominated commodities have found support from the weakening US greenback as investors look for an inflation hedge. Supply disruptions in Nigeria, the North Sea and Iraq have also helped keep prices well above $100 a barrel.
"The oil market is deeply influenced by sentiment and the prevailing feeling right now continues to be one of supply pessimism and therefore price optimism," said the Centre for Global Energy Studies in its monthly oil report.
The Organisation of Petroleum Exporting Countries (Opec), source of more than a third of the world's petroleum, has ignored repeated calls from consuming nations to increase production to help ease prices.
Opec ministers say markets are well supplied and blame high oil prices on speculators and a weak dollar.
Correction
Goldman Sachs, the most active investment bank in energy markets, said the oil market was due for a short-term correction.
"We maintain that the risks of a near-term oil price correction remain elevated but now believe that the downside risks are likely limited to around $99 a barrel," it said.
Analysts' forecasts for US crude this year showed a wide divergence of around $24. Fortis was the most bullish with their prediction of $111, while UBS was the most bearish at $87 a barrel.
Although the poll show-ed oil will peak this year, US crude prices will stay above $90 through 2010.
The median forecast for US oil prices in 2010 rose to $92.05 a barrel, up $7.68 from the last poll.
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