Barclays' oil analysts note that after two years in the current holding pattern for prices, it seems clear that any significant shift in the dynamics of flat prices requires either a significant change in the fundamentals of oil balances, or some significant geopolitical upheaval.
If fundamental balances, OPEC strategy, market psychology and macroeconomic discontinuities all look unlikely to provide a catalyst that might help push crude oil prices out of its long sideways march, then that leaves the geopolitical context as the most likely and strongest catalyst.
“While there are other likely areas of interest for the oil market in 2013, in our view the main nexus for the transmission into oil prices is likely to be the Middle East, with the spiralling situations in Syria and Iraq layered in on top of the core issue of Iran’s external relations.” Barclays said in a report.
They expect that the catalyst will arrive and that oil will average more than $111 per barrel.
“We are therefore maintaining our 2013 Brent forecast of $125 per barrel, just as we have for the past 21 months since that forecast was initiated in March 2011.” Barclays concluded.
Crude oil markets have been looking forward to a catalyst for a while.
On the NYMEX, WTI crude oil for delivery on February 13, 2013 closed yesterday's session at $88.90 a barrel, a loss of 1.36% against the previous close. Brent crude oil for the same delivery date closed yesterday's session at $109.10 a barrel, a loss of 1%.