2012 Crude Oil Price Expectations of Analysts

Analysts anticipate West Texas Intermediate or WTI crude oil prices to reach an average of around $100 a barrel this year. That rate is more than $6 a barrel than the previous year’s average price.

The latest futures market data indicates the probability that the WTI crude oil price will go beyond $125 a barrel is one out of fifteen while the probability that it will be more than $140 a barrel is one out of fifty. The present prediction assumes that the GDP of the United States will grow by 2% in 2012 and 2.4% in 2013 while that of the world will grow by 2.9% in 2012 and 3.7% in 2013.

Changes to the figures of the GDP for quarter four gives a confirmation of the first estimate wherein the economy of the United States moved forward at its quickest rate in six quarters. More than 90 percent of the forward movement was due to the rebuilding of inventory and stronger sales of motor vehicles. But, inventories stay high and ratio of turnover shows that consumption stays weak.

Recent developments in the oil industry over the past month are believed to be heavily impacting current crude oil prices. Tension regarding transfer fees and oil transportation between Sudan and South Sudan led to reports that the South has stopped production of around 350,000 barrels daily.

Moreover, the EU reached an agreement in the past week that its member nations will implement a ban of its entire import of Iranian oil starting July 2012. This may possibly result in a great shift of crude oil supplies globally.

Finally, discussions for Greek debt’s voluntary write down continuous between the bondholders and the government. That serves as proof of the on-going financial struggles affecting Euro zone’s economies which may yet adversely impact near term growth prospects of the economy and crude oil demand.

Geopolitical conflict between the West and Iran and the oil embargo will likely sustain high crude prices until March. Over such time, the average crude oil price will stay close to $106 a barrel but may begin to decline as tensions ease out and the oil from Libya bounces back quicker than anticipated. OPEC keeps on pumping more oil to compensate for supply shortages caused by Iran. With the approaching of the summer season, the time when oil demand is high, oil prices are expected to increase. Moreover, oil demand may rise with improvements in the economic situation and enhanced production.