LONDON – While analysts are generally in consensus in forecasting Brent crude to average around $110/barrel in 2013, the surge in North American production and question marks on the timing of new infrastructure has made for a highly divergent set of predictions for WTI. In their most recent price forecast, analysts at Goldman Sachs said Brent had averaged $110/b over the past 18 months. “Brent crude oil prices have been caught in an increasingly narrow range, where they are high enough to motivate supply, but not so high as to undermine the global economic recovery,” they said. “On net, we see Brent crude oil prices continuing to trade in the recent range over the next year.” “However, given the relatively low level of effective OPEC spare capacity and the ongoing tensions between Iran and the West over Iran's nuclear program, we still see the risk to oil prices as skewed to the upside,” they added. This view was shared by analysts at Morgan Stanley who also forecast a 2013 Brent price of $110/b. “We continue to believe that prices will trade in a range, with upside limited by a likely demand response and downside limited by a supply response,” Morgan Stanley said. “Though oil prices are likely to remain muted into 1H13, we believe that risks are skewed to the upside, with little room for error.” Among the major concerns for Morgan Stanley were geopolitical tensions and supply outages, with prices otherwise expected to trade in ranges and demand responses likely to limit any price surge.
