Citigroup raises oil and natural gas price forecast

By Dave Hannon -- Purchasing, 10/15/2007 11:11:00 AM

A new report from Citigroup raises the firm’s outlook for oil and natural gas prices, saying “traditional fundamentals remain displaced by an increasingly short-term technical model with refining and financial interest.”

Citigroup raised its long-term forecast for crude oil to $60/barrel from $55 and that for natural gas to $7.50 per thousand cubic feet from $7.

Reuters reports that Citigroup also adjusted its 2008 WTI oil forecast to $70/barrel from $60. For 2009, it has a price forecast of $65/barrel.

"A run at $90 is now seen as reasonable," Citigroup analysts said in a note.

OPEC also released a report today saying that its predicted growth in demand for oil remains unchanged at 1.5%, news that added to oil prices spiraling above $85 in daily trading. Looking ahead to 2008, global oil demand growth was forecast at 1.3 million barrels/day, “broadly unchanged from the last estimate,” OPEC said.