Brent oil price closes over $91 mark, $100 oil for 2011?

Brent oil prices close a bullish trading week firm over $91 a barrel and with uncertainty in stocks and foreign exchange markets, analysts are forecasting that Brent crude could start 2011 close to, or over $100.

Brent Oil Futures – Closing Price

Brent crude oil futures for January 2011 delivery ended the week at $91.58 on the ICE Futures Exchange, $5.83 a barrel higher than last week’s close of $85.75 a barrel.

JP Morgan and $100 in 2011

Brent oil prices will trade to $100 a barrel in the first half of 2011 and $120 before the end of 2012, JP Morgan said in their latest oil price forecast yesterday, predicting that OPEC will be very slow to react to higher oil futures.

“We continue to stress that the recent pull back in oil prices offers an opportunity for consumers to reinstate their hedges, with the flat structure in the back of the Brent curve providing an attractive entry point.” Analysts at JP Morgan said.

OPEC Oil Output Rise Crucial

Analysts say it will now be crucial to see whether OPEC, the cartel in control of 40pc of the world’s oil, raises its crude oil output for 2011.

However OPEC maybe unwilling to change its oil output quotas so soon when it meets in nine days time, while Rafael Ramirez, Venezuela’s energy minister said that $100 represents a fair price for a barrel of oil.

OPEC, which produces about 40 percent of the world’s oil, hasn’t changed oil output quotas since agreeing to its biggest ever cuts in crude oil production in December 2008.

Money Printing to Blame for Higher Oil Prices

Leading energy analyst Phil Flynn argues that quantitative easing (money printing) is to blame for higher oil prices and stresses that the US Fed has been protecting the price of oil to support the idea that the economy is improving. Bearish in his beliefs, Flynn does does not think the market can bear $100 oil, despite other predictions.

“We heard from oil tycoon T. Boone Pickens in January predict a return to $100 a barrel, and Barclays prediction in April, and the perennial bulls Goldman Sachs with the latest call. Yet despite strong rallies, oil has fallen short of $100 and in fact, we have risked on more than one occasion a major sell off in oil prices.” said energy analyst Phil Flynn.

Because the fundamentals are not supporting it, Flynn argues that the current price of oil is too high and sees oil getting close to $100 a barrel, but thinks the push will fall short.

US Dollar Value Remains Pointer for Oil Prices

We will have to wait and see how this unfolds, but it is clear that the falling value of the US dollar has helped to raise oil prices, as traders look to invest in a hard commodity as an inflation hedge and possibly a safe haven investment.