LONDON, Oct 22, (RTRS): Oil may reach $100 a barrel sooner rather than later on Chinese demand, a dollar weakening due to anticipated US quantitative easing and expected restocking of French inventories when strikes end, JP Morgan said.
The bank also raised its forecast for US crude futures to an average $81 a barrel for the current fourth quarter from previous $75 a barrel. The 2010 and 2011 forecasts were raised by roughly $2 to $78.50 and $82.50, respectively.
“The key risk is that we are being too cautious and that the threat of $100 per barrel oil that is implicit in our fourth quarter 2011 oil forecast arrives much sooner than we expect — driven by not only a weak dollar, but also by rampant Chinese and emerging market demand, the rebuilding of French strategic stocks,” Lawrence Eagles of JP Morgan said in a research note. JP Morgan estimated supply disruptions caused by the strike at France’s largest oil port Fos-Lavera since Sept. 27 and industrial action at refineries reducing middle distillate inventories there by 8 million barrels in October.
France will have to rebuild fuel stocks as soon as the strikes end.
“In conclusion we can see the need for additional imports of diesel,” the bank said.
“But should the strike fade over the coming weekend then the overall impact to French inventory levels will seem substantial but not catastrophic and should provide an opportunity for additional European imports of ultra-low sulphur diesel in the short term.”
Earlier, Attapol Rerkpibool, PTT’s executive vice president for communications and social affairs, said yesterday that Dubai crude is expected to stagnate at $75-$80 per barrel this year, due to lingering global economic problems that dampen demand.
But global oil demand in the long run would rise. Demand this year is 86.4 million barrels per day, up from 84.8 million last year. It is expected to jump to 104.2 million barrels per day in 20 years.
Oil sources with low product costs would decline in number, which will prompt oil-makers to seek new crude sources to serve rising demand and this would drive up oil production costs.
Global energy consumption is expected to double in 40 years when coal and renewable energy will play a greater role. Currently oil and natural gas are the world’s main energy sources.
Two-thirds of the world’s oil reserves are in the Middle East, which are estimated to last 40 years. Global coal reserves are estimated to be enough for 133 years. Clean coal technology is needed in order to make coal energy much more environmentally friendly.
Thailand consumes energy equivalent to 1.7 million barrels per day.
Also:
VIENNA: The 12-crude basket of the Organization of Petroleum Exporting Countries (OPEC) was up by 55 cents to settle at $79.26 per barrel (pb) on Thursday, compared to $78.71 the day before, the oil cartel said on Friday.
The annual average for the basket price last year amounted to $76.11 pb, it added.
The Opec oil ministers have decided in their latest meeting last week to keep the output ceiling unchanged at 24.840 million barrels per day along with emphasizing the abiding of the member states by their prescribed quotas as there is stockpile amounting to 200 million barrels per day that should be used.
The oil cartel says that its latest decision of keeping output unchanged aims at striking a balance in the global oil market and bringing the current inventories back to suitable levels.
The current price levels range between $70 and $80 per barrel are still very reasonable as they encourage the economic growth and do not harm the economies of consumer countries, while prompting producers to further invest in the oil industry, it added.
It is scheduled for the Opec ministers to hold their next meeting on Dec 11 in the Ecuadorian capital of Quito that currently assumes the Opec rotating presidency in order to discuss the output policies, the market’s rudiments related to supply and demand and whether there is need for making new changes to output ceiling.
The Opec basket is made up of Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE), and Merey (Venezuela).