London: Oil is forecast to average $83.66 (Dh307) a barrel in 2011, a Reuters poll showed, as analysts revised estimates higher for a second month while cautioning the upside was limited by Eurozone debt woes and Chinese rate hikes.
Although emerging market economies are still showing robust growth, developed economies are expected to remain sluggish next year, which combined with abundant supply, high inventories and weak Opec quota compliance may cap a further oil price rally.
"While there have been some signs in the past month that global oil inventories are starting to moderate, we still believe that supply remains abundant," said Benjamin Westmore from National Australia Bank.
He added that although demand conditions in the United States and Eurozone would eventually improve, prolonged fiscal consolidation in those heavily indebted nations would provide a headwind to the oil price growth.
Forecasts lifted
Roughly half of the 33 analysts, banks and government agencies polled by Reuters lifted their forecasts for next year. That pushed the average US crude oil price up from $83.32 a barrel in the October poll, a second consecutive monthly rise.
November was a volatile month for oil, which first climbed to a two-year high of $88.63 a barrel on Nov-ember 11 as the dollar fell on a second US monetary easing programme.
Oil then fell to near $80 a barrel as the dollar recovered amid Eurozone debt problems and a flight from risk caused by tensions on the Korean peninsula.
Expectations Beijing will tighten its monetary policy, which would curb its demand for oil, have also contributed to a decline.
"We expect further tightening measures out of China and persistent Eurozone peripheral concerns to weigh on oil prices and keep prices depressed under $85 into year-end," said Daniel Hwang at Gain Capital.
