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Oil climbs above US$97 per barrel
Source: Agencies |
July 6, 2011, Wednesday
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SOME major investment banks are still betting that oil prices will rise next year despite an emergency injection of crude on world markets from the US and other countries.
Benchmark crude rose as high as US$97.48 per barrel yesterday after Barclays Capital raised its price forecast for 2012. And Goldman Sachs said the International Energy Agency's decision at the end of June to release 60 million barrels of oil from its reserves won't cool off prices as much as originally thought.
Independent oil analysts say prices still could head lower this year. But some think IEA's announcement speaks volumes about its expectations for world oil supplies.
"I think it's an admission from them that Saudi Arabia might not be able to produce enough oil on its own" to meet increased world demand, analyst Stephen Schork said.
Benchmark West Texas Intermediate crude yesterday was up US$1.82 at US$96.76 per barrel in afternoon trading on the New York Mercantile Exchange. In London Brent crude, which is used to price many international oil varieties, added US$2.48 to US$113.92 per barrel on the ICE Futures exchange.
Barclays increased its 2012 forecast for Brent crude by US$10 to US$115 per barrel yesterday, saying prices will rise as global oil demand increases. Barclays sees China, India, Saudi Arabia and Brazil as the main sources for demand growth.
Goldman Sachs also pointed out late last week that IEA will actually release only about two-thirds of what was originally promised. Goldman analyst David Greely said about one-third of the 60 million barrels will come from limiting the amount that countries are required to keep in emergency supplies. Since the oil industry tends to keep much more on hand than what's required, Greely said that the new limits will have an "almost negligible impact on oil prices."
Greely said prices probably won't fall as much as he'd expected following the IEA announcement. He revised his "near-term" Brent crude price forecast from US$117 to a range of US$109 to US$111 per barrel, and his 2012 Brent forecast from US$130 to a range of US$125 to US$127 per barrel.
Also yesterday the government said factory orders rose, as businesses ordered more airplanes, autos, and oil drilling equipment in May. The Commerce Department report suggested that supply disruptions from Japan's earthquake and tsunami in March are easing.
Meanwhile, US gasoline pump prices hit US$3.562 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular has dropped 42.3 cents from three-year highs set in early May, but it's still 83.8 cents higher than the same time last year.
In other Nymex trading for August contracts, heating oil rose 4 cents to US$2.9688 per gallon and gasoline futures gained 2 cents at US$2.9904 per gallon. Natural gas picked up 4 cents at US$4.374 per 1,000 cubic feet.
Benchmark crude rose as high as US$97.48 per barrel yesterday after Barclays Capital raised its price forecast for 2012. And Goldman Sachs said the International Energy Agency's decision at the end of June to release 60 million barrels of oil from its reserves won't cool off prices as much as originally thought.
Independent oil analysts say prices still could head lower this year. But some think IEA's announcement speaks volumes about its expectations for world oil supplies.
"I think it's an admission from them that Saudi Arabia might not be able to produce enough oil on its own" to meet increased world demand, analyst Stephen Schork said.
Benchmark West Texas Intermediate crude yesterday was up US$1.82 at US$96.76 per barrel in afternoon trading on the New York Mercantile Exchange. In London Brent crude, which is used to price many international oil varieties, added US$2.48 to US$113.92 per barrel on the ICE Futures exchange.
Barclays increased its 2012 forecast for Brent crude by US$10 to US$115 per barrel yesterday, saying prices will rise as global oil demand increases. Barclays sees China, India, Saudi Arabia and Brazil as the main sources for demand growth.
Goldman Sachs also pointed out late last week that IEA will actually release only about two-thirds of what was originally promised. Goldman analyst David Greely said about one-third of the 60 million barrels will come from limiting the amount that countries are required to keep in emergency supplies. Since the oil industry tends to keep much more on hand than what's required, Greely said that the new limits will have an "almost negligible impact on oil prices."
Greely said prices probably won't fall as much as he'd expected following the IEA announcement. He revised his "near-term" Brent crude price forecast from US$117 to a range of US$109 to US$111 per barrel, and his 2012 Brent forecast from US$130 to a range of US$125 to US$127 per barrel.
Also yesterday the government said factory orders rose, as businesses ordered more airplanes, autos, and oil drilling equipment in May. The Commerce Department report suggested that supply disruptions from Japan's earthquake and tsunami in March are easing.
Meanwhile, US gasoline pump prices hit US$3.562 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular has dropped 42.3 cents from three-year highs set in early May, but it's still 83.8 cents higher than the same time last year.
In other Nymex trading for August contracts, heating oil rose 4 cents to US$2.9688 per gallon and gasoline futures gained 2 cents at US$2.9904 per gallon. Natural gas picked up 4 cents at US$4.374 per 1,000 cubic feet.
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