High but volatile oil price predicted

“The situation will be quite balanced next year as global demand tends to heighten in line with global economic growth against more crude output from the Opec countries, particularly Libya,” the country’s largest refinery said in its oil-outlook report.
“Capital fund flows, international political conflicts, regulations, seasonal demand and natural disasters pose risks to the price movement. The oil price next year should remain high and stay volatile,” it said.
This year the price moved in the range of $90$120. The average of $106 was up 35.9 per cent from the average of only $78 last year.
If the United States launches another round of economic stimulus ahead of the election next November, it will weaken the dollar and drive investment into oil commodities and other risk assets. However, low growth and uncertainties would raise demand for dollars and gold – considered safe havens.
Thai Oil noted that climate change made it harder to forecast seasonal oil demand, while natural disasters could disrupt manufacturing and pull down oil demand. After the great tsunami that knocked out nuclear power plants, Japan’s oil demand spiked.
On regulations, the United States and Europe show conflicting opinions on compulsory content of biofuel in diesel and ethanol in petrol. As Brazil faces a lower fuel-crop harvest due to drought, research shows that planting fuel crops may worsen global warming. The International Monetary Fund forecasts global economic growth at 4 per cent next year, unchanged from this year. The growth rate may be lower than predicted on such risk factors as the eurozone debt crisis, the fragile US economic recovery and the presidential election in the United States. These are expected to affect oil demand as well as confidence.
The International Energy Agency forecasts oil demand next year at 91.1 million barrels a day, up by 1.3 million barrels from this year. About 60 per cent of the increase is from Asia-Pacific countries, led by China and India, and 20 per cent from the Middle East.
Demand from Europe and the United States will contract while that of Japan will be unchanged, because of economic contraction, higher energy efficiency and supportive regulations for renewable energy.
Supply will be more balanced as Libya returns to the market, though it should resume pre-violence output of 1.6 million barrels after 2012. Output by nonmembers of the Organisation of Petroleum Exporting Countries (Opec) should increase by 1 million barrels a day. Thai Oil also expects more old and inefficient oil refineries, particularly those in Europe and on the east coast of the US, to be shut down because of persistently high oil prices.