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$100 per barrel oil ??

Crude oil prices are set to continue rising after Brent crude vaulted over $US80 a barrel this week – and forecasters are not ruling out the price hitting $US100 a barrel.

“It would be easy to imagine that oil could rise to $US100,” said HSBC chief economist Paul Bloxham. “We have a forecast that sees oil prices climbing. In 2020 we expect Brent crude to average $US85 a barrel.

“We don’t think it would be hard to see oil prices rising higher than our forecasts and we’re happy to characterise the risks as tilted to the upside.”

 Bank of America Merrill Lynch analysts lifted their average Brent crude oil price forecast for 2019 from $US75 a barrel to $US80 a barrel citing cuts to Iran’s output as the most important catalyst for the change.

Morgan Stanley strategist Martijn Rats reiterated in a note last week that he expected Brent crude to hit $US85 a barrel in the coming months and said that it could climb as high as $US105 by 2020. “In coming months, our modelling suggests further inventory draws globally,” he said.

Stephen Innes, OANDA’s head of trading the Asia Pacific, said OPEC’s unwillingness to make any major changes to production before December made for a convincing bullish argument.

“With OPEC showing little inclination to add amounts anytime before the December 3 summit, it’s very likely, in the absence of any about-face from OPEC, that Brent could trade to $US85 plus and WTI [West Texas Intermediate] $US75 plus ahead of the November 4 Iran sanction date as bullish expectations should continue to boil,” he said.

“But when taken in combination with the fact US commercial crude oil inventories are at their lowest since early 2015, it makes for a convincing bullish argument.”


The Australian Financial Review

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