$150 Oil on the Way? – Barron’s Senior Editor Mike Santoli Gives His Outlook For Oil Prices.
With oil prices increasing to their highest level in 2 weeks Tuesday, should you invest in oil? Commodities have bounced back a bank’s increased 2012 price forecast added to expectations for a rebound from a slowed economic climate.
Crude prices joined in gains for commodities, with the 19-commodity Reuters-Jefferies CRB index up more than 1.5 percent, after slipping nearly half a percent Friday and trending weaker in June and the 2nd quarter.
“We may be seeing some running to commodities as a safe haven. When in doubt about all the currencies, move into commodities. And the sector was a little oversold coming out of the holiday,” said Phil Flynn, analyst at PFGBest Research in Chicago.
The oversubscribed sale of U.S. crude reserves last week also had oil analysts and investors assessing whether it reflected tighter global oil supplies than recent assessments. New orders received by U.S. factories bounced back in May, although by less than expected, but the report added to data suggesting manufacturing is normalizing after being dampened by supply chain disruptions from the March earthquake in Japan.
Brent outpaced U.S. crude even as both ran well below their 30-day averages. Barclays Capital raised its 2012 forecast for Brent by $10 to $115 per barrel, and upgraded its 2012 forecast for U.S. crude by $4 to $110. The bank left its Brent forecast for 2011 at $112 but cut its 2011 forecast for U.S. crude by $6 to $100.
“The increase in expectations is due to a forecast further reduction in global spare capacity in 2012, together with a significant intensification of the geopolitical background to the oil market,” Barclays Capital said in a note.
Read more: http://www.foxbusiness.com/markets/2011/07/05/oil-climbs-to-2-week-high/#ixzz1RGEqzuT4
