Prediction Oil Prices 2012 and the Futures

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In the 2012, my prediction that oil prices will continue to rise while benchmark crude rose $1.07 Friday Dec 2011 to end the week at $99.41 per barrel in New York. Brent crude, which is used to price foreign oil imported by some U.S. refineries, added 53 cents to finish at $108.47 in London.

Oil prices futures are based on potential demand after know that IEA release strategic oil reserves to the market. Oil prices for 2011 will remain in the $100 plus range and will then be dependant on other global factors which will determine the price of oil for 2012 and the future. If you take a look at the good news going on in the world right now, it’s hard to see that oil prices will be lower than the current price per barrel and that isn’t going to change any time soon.

Goldman predicts that the world economy would accelerate in the second half of the year itself, increasing demand. “Prices and returns will rise further later this year and into 2012,” a report from the bank said, predicting that Brent crude would average at $120 in six months and $130 in 2012. An EIA report estimates that the oil demand will surpass production by 1.16 million barrels per day this year. The reports also suggests that the oil demand around the world to rise by 1.6 million bbl/d in 2012, a gap of 0.5 million barrels per day (only with increased production). The IMF, for its part, in the updated World Economic Outlook (WEO) for 2011, puts the assumed price for oil based on futures market at $105.25 in 2012. Analyst Hussein Allidina, from Morgan Stanley, said “We remain bullish on oil, particularly in the second half, and expect inventory draws will prompt OPEC to increase production, at the expense of spare capacity”.

China Aviation Oil Singapore (CAO) predicted that oil prices in 2012 still high, CAO also said the global economic slowdown that is widely forecast to deepen next year will not undermine crude prices, which the company forecasts will trade between US$90 and US$110 per barrel. Oil futures trade in New York is currently at around US$101 a barrel. Volatile financial markets this year have pushed oil prices to as low as US$76 in October, down from the year’s high of US$114.60 in April.

Which of these predictions come true? In the oil prices. Though wishful thinking hopes that, somehow, we’ve got it all wrong. Banks are bullish, you know why. But can we sit back, wait and watch as oil prices spiral, because spare capacity was exhausted?