Brent Oil. Roll out the barrel?

Interesting piece here vis-a-vis the oil price over this year and next with forecasts ranging on average of $120 a barrel.

(Reuters) – J.P. Morgan raised oil price forecasts for the rest of 2011 and 2012, a day after prices plunged an unprecedented $12 a barrel, as the bank expects tight supplies to offset economic headwinds.

The bank raised its Brent LCOc1 forecast for the third quarter to $130 a barrel from $108, for the fourth quarter to $120 a barrel from $108 and overall 2011 forecast to $120 a barrel from $110.

J.P. Morgan expects WTI CLc1 to average $109.5 per barrel in 2011, up from its previous forecast of $99. It projects Brent averaging $120 a barrel and WTI averaging $114 a barrel in 2012.

The bank said its current supply and demand projections show a supply shortfall of 600,000 barrels per day (kbd) in the third quarter, even assuming that OPEC increases output by 1.2 million barrels per day (mbd) in the coming months.

Although the deficit could narrow to just 300 kbd by the fourth quarter, that narrowing would depend heavily on additional output increases by Saudi Arabia to 9.5 mbd, Angola to 1.7 mbd, and Iraq to 3.0 mbd by the end of the year, the bank said.

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  1. hopeful says:

    Hi Dan

    how much do you think the drop in Commodity prices in the past few months has been due to Market manipulation by the likes of JP Morgan, and also by the floating of Glencore which no doubt has been able to buy up large quantities of shares at knockdown prices?

    • Brokerman says:

      There’s always a certain amoumt of manipulation that goes on in all sectors of the market that should be taken as a given.The oil and commodity surges of late have been driven by Global uncertainty not least Libya,Iraq,Iran, Syria,Saudi etc Any kind of political unrest in oil producing regions will usually have an upward effect. Goldman Sachs called these recent rises correctly while they were rubbished by most of the big players. Goldman are now saying that this is a good time to get in after the fall. They think that there’s more mileage in commodities especially oil. Take Kurdistan for instance the market sentiment is that companys operating in Kurdistan are 1 bomb away from a run on their sp hence why companys such as GKP are under-value. It only takes one bomb to throw the Kurdistan oilers into free-fall. There just too many variables out there to take into account for private investors thats why you should study what the big players are saying.

      • hopeful says:

        Hi Dan
        Wouldn’t that make North Sea and US oil stocks a safer option? Apart from the budget oil tax hike which will not affect all North Sea companies yet, these shares have plummeted too.
        Are you saying that the market got ahead of itself last year and that GS was performing a useful purpose by keeping the commodities prices down this year?

  2. George says:

    Hi Dan
    I would appreciate your opinion if you have one on Victoria Oil and Gas.
    Kind Regards