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Don’t bet on big fall in oil—even with slowdown

Don’t bet on big fall in oil—even with slowdown

With debt crises either side of the Atlantic, Europe flirting with recession and Libyan oilfields returning to production, it is tempting to be bearish on oil. Tempting but risky.

November 22, 2011 2:48 by

…Brent would slip below $90 per barrel next year and the average forecast was that prices would be close to where they are now, around $106 per barrel.

Goldman Sachs, the most accurate oil price forecaster over the last year, now sees Brent at $125 per barrel in 12 months.

Amrita Sen, oil analyst at Barclays Capital, argues the oil market is caught between competing and intensifying influences.

Outside the oil market, the possibility of a major economic failure has grown, but inside the market, spare capacity has eroded and physical market strength has increased, she said: “In our view, it is only the fear of macroeconomic discontinuities that is keeping a lid on oil prices. Without that fear, we believe that Brent would have already reached an all-time high and climbed past $150 per barrel.” (Editing by Jason Neely)

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