July 2 (Bloomberg) -- Barclays Plc raised its third-quarter forecast for West Texas Intermediate crude oil by 14.5 percent from an estimate in June, citing expectations for fundamentals in commodity markets to return to “normalcy.”

The forecast for benchmark futures contracts traded on the New York Mercantile Exchange was revised to $71 a barrel from $62, Barclays Capital analysts led by Paul Horsnell said in a weekly report yesterday. Barclays increased its projections for Brent crude by 9.5 percent to $69 a barrel and left forecasts for the fourth quarter and 2010 unchanged.

Oil remains 52 percent below its July record of $147.27 a barrel even after prices gained 41 percent between April and June, the biggest quarterly climb since 1990. “Short-term discounting” had taken some commodity prices below levels required to maintain investment, the analysts said.

“Among all the changes that have kept commodities on the boil in recent years, the key factor is that ‘normal’ is not what it used to be,” the analysts said in the report. “Oil prices below $70 or copper prices below $3,000 are no longer normal.”

Oil for August delivery on the New York Mercantile Exchange gained 9 cents to $69.40 a barrel at 11:06 a.m. in Singapore.

U.S. Crude Surplus

A surplus of crude oil in the U.S. has fallen, the analysts said. “The overhang of crude oil inventories is being turned into a greater overhang of oil product inventories” as crude runs hovered near to the high for the year at 15 million barrels per day, according to the report.

Hornsell, who is head of commodities research, said in a May 27 interview global oil demand is heading toward a “wall” of finite supply.

The bank maintained its 2010 estimate for West Texas Intermediate, or WTI, at $85 a barrel, and kept Brent at $84.

“As soon as attention began to focus on the nature of the recovery, and even that there would be a recovery at all, commodities were freed from the tyranny of having been one of the most direct bear plays on the economic state of the world,” the analysts said. “That new freedom left commodities to follow more closely their own individual short and medium-term fundamentals.”

To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net

Last Updated: July 1, 2009 23:24 EDT