Brent Oil to Average $109 This Year, Citigroup’s Morse Says

Brent oil will average $109 a barrel this year, down from the year-to-date average of $111.63, as high summer prices give way to a weak autumn, according to Citigroup Global Markets Inc.

Brent, traded on the London-based ICE Futures Europe exchange, will average $110 a barrel in the third quarter, down from $116.99 in the second, and $105 in the fourth quarter, said Edward Morse, head of commodities research, and Aakash Doshi, a commodity strategist, both at Citi Global Markets in New York.

“It is our judgment that seasonal factors will likely bring higher crude oil prices through mid-summer, perhaps topping the April peaks,” they said in a report to clients dated yesterday.

“Seasonal factors” should make autumn “weak,” followed by a “normal” winter, they said.

“Add to this slowing Chinese and U.S. demand growth and it’s harder to sustain the bull argument,” they said.

Brent oil for September settlement increased 96 cents, or 0.8 percent, to $117.26 a barrel on the ICE exchange.

The analysts also forecast that U.S. benchmark West Texas Intermediate oil would average $92 a barrel in 2011, compared with $98.36 so far this year. They estimated July 6 that Brent oil’s premium to WTI may widen to $40 a barrel or more between now and the middle of 2012.

WTI for August delivery rose $1.55, or 1.6 percent, to settle at $97.24 a barrel on the New York Mercantile Exchange. September WTI futures were $19.66 a barrel cheaper than Brent.

The New York-traded oil will probably average $90 in the third quarter and $82 in the fourth, the Citigroup analysts said. Prices were at $101.56 on average in the second quarter.

To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.

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