Oil price 2011 = Oil price forecast for 2011, will oil hit $150 by summer? : With 2010 at a close, we take a look at oil prices over the last 12 months and attempt to make an oil price forecast for 2011, backed up by bank forecasts for 2011 and analysts and traders points of view on the coming year’s price of oil.
2010 – A Year of Rising Oil Prices
WTI oil prices are around 15 percent higher today than they were on 1st January 2010, and Brent crude oil futures are more like 20 percent higher still ( see 1st January 2010 article here ).
Although 2010 has seen crude oil prices take on year highs and lows, it’s clear that the world economy continues to re-shape, and in turn, global oil demand is now a main driver of oil prices.
BP Oil Spill of 2010
The BP oil spill disaster that started in April of 2010 saw oil prices jump higher ( the first of many BP oil spill articles, here ) however oil prices are now even higher than at any point in the year.
Many analysts believed that the BP oil spill would have a long lasting effect as oil demand all over the world remains tight, if not in reverse at this point (less oil available than oil demand itself).
But the BP spill was finally contained, with little effect on the downside in short term oil prices. So, what’s driving oil prices back near the $100 mark?
Currency Markets in 2010 and the US Dollar
The ICE US Dollar Index is a great way to track short term oil price movements as oil futures and other commodities are priced in dollars, hence, if the dollar weakens, oil prices tend to move higher.
Did you know that the US dollar Index was actually lower, this time last year than today? Here’s the full 2010 US Dollar Index chart:
As the chart shows, the US Dollar Index opened 2010 at 77.909, which is around 3 percent lower than todays 80.201. However, oil prices are much higher today than a year ago.
Brent oil prices opened 2010 at $77.93 and is today currently at $93.81 a barrel, 13.00 GMT on the ICE Futures Exchange. That’s an increase of around 20 percent higher than a year ago. There’s a big difference in 3 percent and 20 percent, which tends to mean other factors are at work, driving oil prices higher.
Oil Price Forecast for 2011
Goldman Sachs, JP Morgan and other large banks are forecasting higher oil prices in 2011. In fact, it’s hard to find any trader or analyst that expects oil prices to head lower anytime soon.
Our point of view is that oil futures will remain bullish and may well see $100 a barrel in the first trading week of January 2011 (forecast for Brent oil, as traded on the ICE Futures Exchange).
As for oil prices into the spring and summer of 2011, we forecast that oil prices will go higher than this. Here’s why:
1: Global Oil Demand is Higher than Oil Supply
2: There is another Bubble Emerging in the Oil Market
Of course, many short to medium term situations over the world could change this view (Middle East or Asian Conflicts) but most of the potential situations would only make oil prices go even higher.
The only way oil prices would see a big fall in 2011 would be if the US dollar makes a massive recovery, back to the 90 – 100 level.
Our forcasts for oil prices into 2011 are:
January 2011 – $100 oil
April 2011 – $110 oil
July 2011 – $130 oil
October 2011 – $150 oil
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Oil Price
