New York, United States — ESI-AFRICA.COM — 06 October 2011 – Brent oil will struggle to recover from its longest slump since the 2008 financial crisis, as a weakening global economy cuts growth in demand to the lowest level for any fourth quarter in the past three years.
Brent crude will trade an average 2% higher than yesterday’s opening price of US$101.81 a barrel during the final three months of the year, according to the mean prediction of 10 analysts whose third-quarter projections were the most accurate of 31 compiled by Bloomberg. Futures lost 8.6% in the third quarter, extending a 4.2% drop in the second.
Oil is falling as Saudi Arabia, the world’s biggest exporter, pumps crude at near-record levels and Libya revives production just as the economic slowdown shows signs of sapping demand.
Consumption, which typically climbs toward the end of the year as the northern hemisphere’s winter approaches, will rise 4% this quarter, about half the levels of 2009 and 2010, according to the International Energy Agency (IEA).
“The outlook is deteriorating more and more, and the velocity is somewhat alarming,” said Eugen Weinberg, the Frankfurt-based head of commodities research at Commerzbank AG who predicts Brent may average less than US$100 a barrel in the fourth quarter. “The risks to forecasts right now are to the downside, and not just on demand. Libyan production is coming back sooner than expected.”
Brent will average US$103.80 a barrel in the final three months of the year, based on the mean of the 10 most accurate forecasters tracked by Bloomberg. It settled at US$99.79 on the ICE Futures Europe exchange on Tuesday, after averaging US$112.09 in the third quarter.
The highest estimates among the top-ranked 10 for Brent prices in the fourth quarter are at US$115, by Barclays Plc, and US$110, by Goldman Sachs Group Inc.
Demand for oil is weakening as Europe struggles to contain its sovereign debt crisis while the economies of the U.S. and China, the biggest energy consumers, show signs of decelerating.
Fourth-quarter oil demand is expected to increase by 400,000 barrels a day to an average of 90.2 million a day, says the Paris-based IEA. Consumption increased by 700,000 barrels a day in the same quarters of 2009 and 2010.