The past year or so has been rough sledding for crude oil prices, but happy times are here again thanks to demand from developing economies, a new note said Monday.<\/p>\n
Martin King, analyst with First Energy Capital, could barely contain his excitement as he raised his 2010 price target for West Texas crude to US$83 a barrel, up US$6 from his previous outlook.<\/p>\n
"We still love crude oil. Just as we did from the depths of the price despair at the start of 2009 and into 2010, we have been bullish," he said in a note. "We are becoming increasingly so with this update, and feel there is much more upside to come in the crude oil pricing story for many years into the future."<\/p>\n
He expects crude to eventually cross the US$100 threshold again, to US$110 by 2013. In the meantime, look for US$87 in 2011 and US$95 in 2012. <\/p>\n
Mr. King also forecasts the losses in oil demand over the past two years will be wiped out by the end of the year, as non-OECD countries approach 50% of global demand.<\/p>\n
And while prices were largely range-bound between US$70 and US$85 a barrel during the first quarter, that is also expected to be set aside in the second quarter for a move into US$85 to US$89 range.<\/p>\n
However, there will likely not be a "runaway" in prices from now into 2011. Rather, prices will pick up steadily.<\/p>\n
"[It is] more akin to what happened in the early 2000s, where structural forces in the global marketplace generated a steady but consistent rise in prices," he said. "For the price bulls, it is a steady run to higher prices, just not a stampede."
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