Deutsche lowers crude forecast on Saudi efforts to boost output

Deutsche Bank on Tuesday lowered its 2012 and 2013 Brent and WTI crude price forecasts, citing softer demand and higher supply.

The bank cut its 2012 Brent crude price forecast by 9.4 percent to about $107 a barrel and also lowered its 2012 WTI view by 11.5 percent to $94 a barrel.

It also slashed its 2013 Brent price forecasts by 13.3 percent to about $104 a barrel and WTI by 15.3 percent to about $96 a barrel.

“Going into the third quarter, demand-side fears are set to persist as growth rates are downgraded and as markets now face a more ample supply picture thanks to Saudi efforts to boost output,” Deutsche Bank analysts said in a note.

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However, the potential geopolitical risk posed by Iran, among other factors, and an expected improvement in economic growth, aided by stimulus measures in the United States and China, are likely to push oil prices higher by the year end, the analysts said.

The bank also expects the WTI-Brent spread to narrow “meaningfully” next year due to major pipeline projects.

Deutsche Bank raised its fourth quarter 2012 natural gas price forecast by 6.9 percent to $3.10 per mmBtu (million British thermal units), saying US natural gas production data is showing signs of a slowdown.

“Growing evidence that natural gas production is finally starting to respond to sustained weak pricing should provide modest support for the balance beginning in Q4 this year and into 2013,” the analysts said.

Reuters