SocGen Revises 1Q Brent Crude Price Forecast Up By $4/Bbl

sg.biz.yahoo.com Monday February 24, 11:26 AM

SINGAPORE (Dow Jones)--French bank Societe Generale is revising up its first-quarter Brent crude price forecast by US$4 a barrel to US$29/bbl, taking into account the average price to date of US$30.19/bbl, Paris-based SocGen economist Frederic Lasserre said in a report issued Monday.

The latest revision, which follows less bullish price forecasts in mid-January, focuses on supply owing to the strike in Venezuela and stronger-than expected demand from October last year through March.

The difficulty in anticipating the exact timing of military intervention in Iraq contributed to the US$4/bbl upward price revision for Brent crude, Lasserre said.

SocGen's "central scenario remains that there will be a war (90% probability), of short duration...without causing major damage to oil installations in the Gulf."

The French bank is convinced of limited price upside potential, capping Brent crude at US$35/bbl, before prices slide to US$25/bbl once the attack is launched, or once the U.S. authorities announce their decision to this effect.

SocGen initially expected the war to begin in mid-January, then February, before revising its Brent price forecast to the latest expectations of a war timed for first-half March.

SocGen is maintaining a Brent crude price forecast of US$20/bbl for the second quarter, based on the resumption of Venezuelan exports, increased Saudi production and a 1.8 million-barrel-a-day seasonal fall in demand, which will trigger a slide in prices towards the end of March, the report said.

-By Sharon Lim, Dow Jones Newswires; 65-6415-4067; sharon.lim@dowjones.com

-Edited by George Bernard