Barclays Capital has released analyst predictions on global oil prices and supply/demand dynamics as it looks ahead to 2011; all of which indicate higher prices and demand.
Top 5 Viewpoints:
1. Strong demand, particularly from China. Barclays predicts Q4 2011 demand to break 90 million barrels per day for the first time.
2. Slowdown in non-OPEC supply, which Barclays says is “slowly grinding to a halt.”
3. Oil prices to reach $100/barrel with little interference from OPEC, which has rolled over existing (and sometimes loosely enforced) production quotas into 2011.
4. Political environment matters in boosting production, in particular locations such as Nigeria and Iraq.
5. Continued market volatility. Barclays writes: “In the past, the rough boundary of 5% of spare capacity has often represented the border between highly volatile markets and calmer conditions.”