Business | Oil & Gas
Barclays raises US crude forecast to $137 in 2015
Prediction reflects concern about slow growth in non-Opec supply.
- Reuters
- Published: 01:05 February 23, 2008
London: Investment bank Barclays Capital raised its forecast for US crude oil in 2015 to $137 a barrel from $93 after supply concerns helped prices hit fresh record highs this week.
The move by Barclays, one of the most bullish forecasters of oil prices, reflects its concern about faltering growth in supply from outside the Organisation of the Petroleum Exporting Countries (Opec).
"The remorseless move up in long-run prices has not yet fully played out," Barclays said in a research note.
"We are somewhat more concerned about non-Opec supply response than we were 18 months ago."
Oil for delivery in December 2015 set a record high of $94.04 on Wednesday, a sign investors are betting that supply concerns and other factors boosting the cost of crude are unlikely to fade soon.
Barclays is among the most bullish banks on oil prices. In a Reuters poll, last conducted on January 25, Barclays predicted US crude would average $88.30 in 2010, the second-highest in the poll.
Long-run prices
Long-run prices, which until 2003 were stable around $20-$25 a barrel, have moved up sharply. When oil for immediate delivery hit $100 for the first time on January 2, the December 2015 price stood at $88.33.
The rise in long-term prices comes as a growing number of industry officials are questioning mainstream oil supply forecasts, underscoring the challenge of meeting ever-rising world demand for fuel.
Among the factors driving long-term prices are falling production in some areas outside Opec and rising demand led by countries such as China.
"The decline rates are, in our view, higher than consultant consensus seems to imply, and the immediate profile is not encouraging," Barclays said of non-Opec supply.
Analysts say the rising long-term price also reflects expectations that a growing portion of supply will come from so-called unconventional sources, which need a higher oil price to make money.
The International Energy Agency, adviser to 27 industrialised countries, warned last year that a supply crunch in the period to 2015 could not be ruled out.
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