Strap In For Another Volatile Year

BMI View: In our December oil price outlook we highlighted two factors that dominated the oil market during the course of 2011. Firstly, repeated production outages coupled with the Libyan civil war, resulted in serious supply tightness. Secondly, demand remained resilient despite a deteriorating macro-economic environment. We anticipate that these factors will continue to drive the market during 2012, though we do expect supply tightness to ease gradually over the course of the year. As a result, barring any significant supply disruptions, we expect demand-side considerations to intensify and key price benchmarks to correct to the downside from their 2011 averages. BMI has therefore maintained its forecast at US$102/bbl for Brent and US$93.50/bbl for WTI.

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