Oil prices trading steady, next moves higher to $90?

Oil prices have been “buoyed by continued positive macroeconomic data flow and a gradual tightening of oil market balances,” Barclays Capital said in a report. “The dominant range is moving upward, and a rough $70 to $80 range will ultimately transition to a $80 to $90 range.”

US Light crude oil futures for April delivery was down 40 cents to $81.47 a barrel at midday Singapore time in electronic trading on the NYMEX, while in London, Brent crude oil futures was down 42 cents at $80.05 on the ICE Futures Exchange.

Several Wall Street analysts say the market is poised to flip even further, with spot prices rising above longer-dated futures for the first time since mid-2008. The inverted price pattern they envisage – called “backwardation” among economists – would signal a world in which oil demand catches up with supply after a severe, recession-induced lag. This would skim excess inventories from storage terminals.

David Greely, of Goldman Sachs, anticipates global inventories will keep falling, changing price spreads and lifting crude into the $85 to $95 a barrel range in the second half of the 2010. Oil traders say a popular recent bet was “calendar spread options”, profitable if April crude loses its discount to May.

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