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Quarter ends with bang

Oil & Gas Journal

Sam Fletcher
Senior Writer

The fluctuation of crude futures prices on the New York Mercantile Exchange in March ended the first quarter of 2008 with a bang, said Paul Horsnell, Barclays Capital Inc., London. By Mar. 31, the average price for benchmark US light sweet crudes was $97.82/bbl, "the highest quarterly average ever and $39.60/bbl higher than the first quarter of 2007," Horsnell said.

As a result, nine investment banks increased their forecasts for average 2008 crude prices by $10/bbl or more, including three banks that raised their estimates by at least $20/bbl, in what may be "the largest shift in consensus ever seen in any single month," said Horsnell. "Over the course of the first quarter as a whole, the consensus forecast for the average of West Texas Intermediate in 2008 has shifted up by $14/bbl."

At the start of the quarter, he said, "$100/bbl was something that attracted massive media coverage based on the angle of how exceptionally high a price it was. By the end of the quarter, headlines such as 'Oil prices slump to $100' were becoming commonplace, i.e. $100 has already gone from being seen as high to being seen as a symptom of a weak market."