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Oil price forecast, where’s crude heading for the rest of 2010?
Published on July 1, 2010 by oilprices · 10 CommentsOil price forecast, where’s crude heading for the rest of 2010?
It’s officially the 1st of July, and in the second half of 2010, with stock and currency markets showing no sign of any clear trading pattern, what’s in store for crude oil prices for the rest of 2010 and can global events shape the future price of oil?
Stock Markets and the Relation to Oil Prices this Year
The US stock market is currently down around 12 percent off it’s April 2010 highs of the 11,000 mark on the Dow Jones, however does this dip reflect in the same way for US WTI oil prices?
Well in fact yes, WTI oil prices saw a 2010 high of around $87 a barrel in April 2010 and with current prices at the $74 to $75 mark, it seems that oil prices are in fact tracking stock markets at present.
The Gulf of Mexico Oil Spill Crisis
The Gulf oil spill disaster which began on April 20th 2010 shows little signs that BP can actually stop the leak anytime soon, so will this have an impact on oil prices?
The Gulf of Mexico oil platforms supply around 30 percent of crude oil directly to the US and if this supply dries up or begins to drop then yes, this could have a reverse effect on oil prices, sending oil for 2010 higher.
We will have to wait and see what happens in early August 2010 as BP have a deadline around this time to contain and plug the oil well. If they fail, expect oil prices to push higher.
Tensions in the Middle East and Iran Sanctions
US President Barack Obama will sign into law a package of tough, new energy and financial sanctions against Iran because of its nuclear program later today.
In June 2010 the UN Security Council approved a fourth round of sanctions on Iran because of its refusal to stop it uranium enrichment program.
The EU has decided to impose its own unilateral sanctions against Iran including a ban on new investment, technical assistance and transfers of technologies to Iran’s oil and natural gas sector.
So will these new sanctions against Iran have any effect on oil prices? Our thoughts are that the new sanctions will have little or no effect on oil prices, only direct conflict with Iran would rise the price of oil, something which many feel is unthinkable right now.
However, in the last two weeks there has been a crescendo of reports that Israel and the US are preparing for war against Iran. Also, the Sunday Times of London reported on June 12th 2010 that Riyadh had agreed to allow Israeli warplanes to fly through its air space to attack Iran.
Oil Price Forecasts from Analysts
“Getting out of the worldwide recession was always going to be a long slog,” Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington, who forecast oil will average $65 a barrel in the third quarter and $70 in the fourth, said in an interview. “It’s always been our view that the second half of 2010 was going to be a tough period.”
“I have had to take a new look at the market since the explosion of the Deepwater Horizon drilling rig,” said Stephen Schork, president of consultant Schork Group Inc. in Villanova, Pennsylvania. “We are now looking at a deficit in supply, the scope of the deficit is a question.”
Goldman Sachs reported earlier in 2009 that they forecast oil prices to reach between $90 and $95 per barrel in 2010. Here are the reasons why:
1. Recovering economy will demand more oil
2. Investors will purchase oil to hedge against a falling US dollar
3. Expected energy shortfall with OPEC late 2010
4. Easing credit markets help crude oil storage costs
Essentially, the global economy is expected to improve in the second half of 2010 which would have a positive effect on oil prices and could lead to increased crude oil demand worldwide.
What’s your view on oil prices for the rest of 2010, leave a comment below:
Tags: 2010, crude, forecast, markets, oil, oil price, Oil Price Forecast, price, stock
Hot debate, what do you think? Vote:
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The price of crude oil today is not made according to any traditional relation of supply to demand…. companies. As much as 60% of today’s crude oil price is pure speculation driven by large trader banks…
The global market is “full of oil” and rising crude prices are being artificially driven…
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Here it is, straight from the desk of IEA analysts…
Global oil demand now takes its cue primarily from rising emerging country incomes. World demand in 2010 will increase by 170,000 barrels a day to 86.5 million barrels per day.
Oil prices are going up!
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In the short term, recessionary pressures are still holding down both oil demand and oil prices from the highs of 2008. This reinforces the impression of long term supply adequacy.
In the long term, increasing economic activity, increasing demand from developing countries, and the gradual replacement of depleting conventional oil supply with expensive and low flow-rate non-conventional oil (e.g. deepwater) and synthetic oil (e.g. tar sands) will drive the oil price substantially higher.
Once the oil price gets back into triple digits, it could trigger another recession and a drop in oil prices. And so on.
Hot debate, what do you think? Vote:
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Once a hot war breaks between Western/Israeli forces & the fanatical Islamic régime of Iran, expect crude oil & general energy prices to double, if not higher, contingent on just how deleterious the situation becomes regarding the curtailed flow of energy out of the Persian Gulf, along with if the Russian-armed Tehran dictatorship is foolish enough to launch missiles directly at Israel.
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What a preposterous way of presenting the problem Mark!!!
It is clear than you have little depth of the situation in that region.
I would invite you to expose facts instead of throwing accusations that you do not even understand.
Despite that oil is not driven anymore by the conventional model of Demand and Supply, there are too many elements that might tip the balance in any way:
Euro Zone situation, situation in the Middle-East (as it hold an important volume of oil) but also global economy.
My own assumptions would be 80$ for 2010 and 87$ for 2011.
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Basile,
After reviewing your feeble insults, you should really read this in conjunction with your failed prognostication about oil only remaining in the $80s for 2010 and a top of $87 in 2011…..putz!
‘NEW YORK, Dec 7th, 2010 (Reuters) – U.S. crude oil futures prices rose sharply on Tuesday, pushing above $90 a barrel for the first time in 26 months as cold weather boosting fuel demand and the dollar’s weakness kept oil lifted.’
Also The Iranian régime and its Islamic cohorts in Syria, Hezballah infested Lebanon plus Hamas in Gaza continue beating their war drums against Israel. The Iran dictatorship brazenly proceeds toward nuclear weapons. After all how else can Ahmadinejad “wipe Israel off the map” without them? These little Middle Eastern issues have a tendency of driving up energy prices.
On your nonsensical dribble “..oil is not driven anymore by the conventional model of Demand and Supply..” try to understand the reality of the energy markets while your freezing in the bankrupted, debt ridden Eurozone:
‘LONDON — 12-7-2010 Oil prices jumped on Tuesday to their best levels for more than two years, as a weak dollar and soaring equities propelled commodities higher, with copper and gold hitting record heights.
Brent North Sea crude for delivery in January traded as high as 92.86 dollars a barrel — the best level since October 2008. It slipped later to 91.16 dollars, down 29 cents.’
Cheers!
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Prices are going higher, all the banks are betting on $100 plus oil for 2011, oil demand over the world is growing, oil production is not growing.
Supply and demand anyone?
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My cat coughed up a fur ball today. My bet is based on this information, oil will be $150 by the end of the week since you folks will use any information to drive it up.
In reality, the good news is that here on the street, the common folks I relate with daily are all getting really, really, really, upset now that prices are over $3 again…totally inconsiderate of supply and demand.
This leads to even better news as the time is soon coming whereby folks are going to start a revolt.
Apathy doesn’t last forever when so many are getting taken advantage of.
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As of December 22nd, 2010 Brent crude oil jumped to $93.79 a barrel, while NYMEX crude oil hit $90.37. Both prices are for the February-2011 contract.
The Obama White House continues saying “there is no inflation”, but then again they neither factor in energy or food prices, in their inflation index. How nice…
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Due to the spreading Arab World, jihadist instigated contagion, from Egypt, Yemen, Algeria, Tunisia to Jordan, the price of London’s Brent crude oil has topped $100 a barrel on 1-31-2011.
NYMEX crude oil, jumped over 3% on the day session, to above $92 a barrel.
During 2011 price records will be broken in energy contracts and precious metals, while international stock indexes will turn very bearish, if not display a repeat of the crash of 2008.