LONDON (SHARECAST) - Oil prices are trading close to levels seen in May last year and analysts think the average cost of crude in 2011 will be 13% more than last year.
Bernstein thinks the price will average $90 a barrel this year compared with the $79.60 in 2010. The research house got within $1 of getting its 2010 prediction spot on.
A Bloomberg poll puts the average price on the New York Mercantile Exchange at $87 a barrel, second only behind the $99.75 recorded in 2008, but way up on 2009’s $62.09.
"We expect OPEC to have to increase their production, causing a reduction in spare capacity, which to us is increasingly becoming a more important determinant of oil prices,” Oswald Clint, Bernstein's head oil analyst in London, said.
“Since China became a more important part of the demand pie, the spare-capacity factor has become more important."
Copper is also going well. It’s up at another record high following strong manufacturing data out of the US and the eurozone.
The red metal for delivery in three months was changing hands at $9,728 a tonne as traders predict demand will increase in 2011.
