Oil prices to be trading above $90 a barrel says Citigroup

Oil prices will be trading at or above $90 per barrel, but longer term should settle closer to $80, says a new report from Citigroup Global Markets. Citigroup Analyst Faisel Khan said that Citigroup’s long term crude oil price forecast increased to $80 from $65 a barrel, while on a medium term basis, the bank expects oil to push toward $90 a barrel.

In 2010, the Citigroup Analyst expects five key themes to develop including the arrival of concentrated oil production growth, an aggregate capex that remains robust and reserves that are likely to grow. In addition, he expects balance sheets to strengthen, returns to peak before 2012 and resource base and asset costs to differentiate companies.

“We project a tightening in capacity usage and an increase in the call on OPEC crude of some 3.8-million barrels a day by 2013, Mr. Khan said in a note to clients. “Beyond 2014 the addition of volumes from Iraq into the OPEC mix will be an added complication.”

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