Brent oil price hits $111, markets and Euro debt in focus

Brent oil futures open today’s trading session around $111 a barrel as oil prices saw a boost higher in line with stock markets and positive expectations surrounding Europe’s debt situation, which is keeping analysts and traders guessing to short term price direction.

Latest Brent Oil Price

In London, Brent crude oil futures for December 2011 delivery was trading at $111.48 a barrel, 06.55 GMT this morning on the ICE Futures Exchange. Brent oil closed yesterday’s trading session up 1.1 percent at $111.41.

Looking for Price Direction

“The oil market’s just looking for some sort of price direction. Traders aren’t willing to push prices higher given the weak economic outlook in the US and what’s happening in Europe.” said David Lennox, a resource analyst at Fat Prophets, Sydney, who predicts US oil prices will trade between $80 and $90 a barrel.

Goldman Sachs Brent Forecast

An improving economic outlook in Europe and declining crude oil supplies may present a real upside risk to Brent crude prices, according to Goldman Sachs.

Brent oil prices, which dropped 12 percent in London trading in August and September, may fall too low because of uncertainty over the economy, Goldman said in an emailed report dated yesterday.

The so called backwardation in Brent contracts, where prompt prices are at a premium to later months, creates an incentive to draw down inventories, Goldman said.

“Persistent uncertainty over Europe would likely continue to increase the upside risk to Brent crude oil prices. De-stocking makes the market increasingly vulnerable to upside demand surprises or supply shortfalls.” said David Greely, a managing director for Goldman Sachs, New York.

Euro Debt Crisis

Meanwhile, Europe’s options for overcoming the debt crisis narrowed as Germany doused expectations of a breakthrough at this weekend’s summit and central bankers balked at extended bond purchases. Failure to agree a clear path forward and to solve the ongoing debt problems surrounding Greece and other EU countries may prove negative for stock markets and commodity prices, including oil.

“We’re really in a bind here. In the Loop. We have a lot of egos, a lot of national interests, a lot of political considerations, and that’s just hampering us from getting to a solution.” said Carl Weinberg, founder and chief economist at High Frequency Economics.

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Brent oil price hits $111, markets and Euro debt in focus