MARKETS: EIA sees “one-in-50” chance of WTI exceeding US$140 a barrel in 2012

(EnergyAsia, February 23 2012, Thursday) — The US Energy Information Administration (EIA) thinks there is a 1-in50 chance that benchmark crude WTI could exceed US$140 a barrel in June 2012.

Based on recent futures and options data, the official energy statistics arm of the US government said the market believes there is a 1-in-15 chance the average WTI price could exceed US$125 a barrel.

For the full year, it sees WTI averaging US$100, almost US$6 per barrel above 2011’s price. The agency sees oil prices continuing to rise to reach US$106 per barrel in the fourth quarter of 2013.

It expects the Henry Hub natural gas spot price to average US$3.35 per million British thermal units (MMBtu), a decline of about US$0.65 per MMBtu from 2011, before recovering to US$4.07 in 2013.

The EIA said its price forecasts assume that US real gross domestic product (GDP) will grow by 2% in 2012 and 2.4% in 2013, while world real GDP (weighted by oil consumption) will rise by 2.9% and 3.7%.

The forecasts do not take into account geopolitical developments including the escalating tensions between the West and Iran over its controversial nuclear energy programme.

Oil prices surged to a nine-month high on Feb 22, with WTI climbing above US$106 and global benchmark Brent exceeding US$121 a barrel as crude supply problems in South Sudan, Yemen, Syria and Libya added to rising tensions between the West and Iran.

Vitol, the world’s largest independent oil trader, said oil prices could surge to a new record high of US$150 a barrel while RMG Wealth Management sees Brent at US$200 if the West’s confrontation with Iran escalates.

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