Oil prices may surge to $100 a barrel sometime in the next two quarters as the US dollar weakens against the euro, Deutsche Bank energy economist Adam Sieminski said Friday. “We think the dollar could weaken further to $1.60 against the euro and it implies pushing oil prices to that threatening triple-digit level,” Sieminski told Reuters. A weaker dollar could mean “oil prices have even further to run,” but a rise to $100 a barrel may hurt an economic recovery, Deutsche Bank said in a research note. “We believe that $80 oil is not high enough to derail the global recovery, but our economics team would start looking for weaker overall consumption at $100 a barrel prices,” the note said. Oil prices rose to a one-year high of $82 earlier this week, after rallying 17 percent since Oct. 10. That rise coincided with a rise in global stock indices and a weakener dollar, which plunged to a 14-month low above $1.50 per euro this week. “The ‘traditional fundamentals' are improving, but only slowly,” he wrote. OPEC members could be put in a “difficult position” when they meet in December to consider whether to boost oil production and cool prices. “OPEC may want to calm the market with more crude, but it's not clear that refiners have an appetite to take it,” Sieminski wrote. Deutsche Bank has kept its 2010 oil price outlook at an average $65 a barrel, below today's price near $81. Sieminski said the lower price outlook was in part due to still high global inventories. Global oil demand plunged last year amid a financial crisis and after oil prices spiked to a record above $147 in July, before falling to nearly a five-year low near $32 in December. Oil prices fell on Friday as a stronger US dollar and doubts over the pace of economic recovery halted the commodity's recent rally. US crude for December delivery settled down 69 cents a barrel at $80.50, while Brent crude dropped 59 cents to to settle at $78.92. The dollar gained against a basket of other currencies, while the S&P stock index fell more than 1 percent, as weak industrial sector earnings made investors question the pace of an economic recovery. Oil, priced in dollars, remains cheap for holders of foreign currencies and has been moving in an inverse price relation against the dollar. Optimism for an economic recovery spurs investment in traditionally riskier assets like oil and stocks. That has helped crude prices rise even though oil inventories remain well above average levels. OPEC Secretary General Abdullah Al-Badri said on Thursday the group, which pumps a third of the world's oil, could consider raising production when it meets in December. Industrial orders and business activity rose in the euro zone, with economic strength returning across much of western Europe even as Britain's recession dragged on.
