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Forecast: Oil price will exceed $ 100 soon

06 December 2010 09:57 (UTC +04:00)

OPEC will be very slow to react to a price spike, SteelGuru reported.

Analysts at JP Morgan said that the current policy related surge in Chinese oil demand is likely to fade early in the first quarter, but ongoing strength in Emerging Market oil demand over the next 24 months is seen lifting the call on OPEC production to levels last seen at the peak of the oil price spike in 2008.

They said that we think OPEC is unlikely to raise output ahead of its June 2011 meeting unless oil prices push above USD 100 per bbl, leaving inventories to draw over the Q1 pushing Brent crude oil into backwardation, a structure that is likely to remain in place for much of 2011 and 2012.

They added that as such, we continue to stress that the recent pull back in oil prices offers an opportunity for consumers to reinstate their hedges, with the flat structure in the back of the Brent curve providing an attractive entry point. Similarly, investors should look to move their positions to nearby months.