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CITI: OIL TO RALLY AGAIN IN 2012

22 December 2011 by Cullen Roche 6 Comments

Seth Kleinman, European head of energy research at Citigroup recently released his oil outlook for 2012.   He says inventories will remain tight and demand will continue to push higher.  The risk of another global supply disruption creates substantial upside risk.  The WTI/Brent spread will narror to $7-$8 with Brent averaging $110 in the coming year with a risk of $120.  He cites $120 as the “pain point” at which it starts to constrain global GDP.  His biggest fear is supply disruption coming from Iran or Iraq…

You can see his recent Bloomberg interview here:

 

Source: Bloomberg TV

Cullen Roche

Cullen Roche

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Comments
  • Jensen

    I feel like I remember Citi/Goldman/etc consensus “pain-point” during 2010 – mid 2011 was $100/barrel. The more you adjust your predictions, the harder it is to be wrong!

    12/22/2011 at 10:43 AM
  • KarmaPolice

    Oil at $120?

    You can say goodbye to any car-dependent, suburban home appreciation realized in the last 20 years.

    12/22/2011 at 11:05 AM
  • arrrgh

    with economic activity in europe and china weakening, i find strength in oil prices puzzling.

    12/22/2011 at 12:46 PM
  • Larry

    China and EM nations are not contracting. Their growth is slowing from 10% down to maybe 6%, but it is still growth, and the EM demand for oil continues to grow. The big question is the supply side. Will technology and peace in Libya and other oil producers lead to sizeable increases in supply of oil?

    12/22/2011 at 1:38 PM
  • Leverage

    What a mess. With Europe on the verge of a deep recession high oil prices will literally kill the economy. Off course, bye bye decouple USA, and bye bye QE3 unless Bernanke wants to accelerate the disaster.

    12/22/2011 at 4:34 PM
  • KB

    People misunderstand the China story by a massive degree.

    It doesn’t matter if China slows. In fact, if China is slowing due a shift from investment-led GDP to consumer-led growth, then oil consumption will grow even more rapidly. Its only a matter of time before that occurs. These consumers need more cars, they need more gadgets, they need energy for their houses etc etc.

    Oil is headed much much higher….

    12/22/2011 at 10:46 PM