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Oil Price Forecast for 2011 Cut to $88 by ANZ Bank

Australia & New Zealand Banking Group Ltd. lowered its forecast for crude oil in New York by 1 percent next year, citing higher-than-average inventories and slowing economic growth in the U.S.

Oil futures will average $88 a barrel in 2011, Mark Pervan, a senior commodity analyst at ANZ, said in a report today. The company also cut its 2010 price estimate by 1.7 percent.

“A high exposure to a soft U.S. economic recovery and a large overhang of U.S. crude oil stocks has tempered our view,” Pervan said. Inventories in developed nations have climbed to 60 days’ consumption compared with a normal 53 days, he said.

Oil futures have averaged $77.73 a barrel so far this year. The contract for November delivery rose as much as 63 cents, or 0.8 percent, to $75.60 a barrel today and was trading at $75.25 at 3:50 p.m. Singapore time.

Concerns about the rate of U.S. economic expansion are holding back gains in crude markets. The country is the world’s largest oil user.

The worst recession in the country since the Great Depression ended in June 2009, the National Bureau of Economic Research said Sept. 20. The group didn’t conclude that the “economy has returned to operating at normal capacity,” it said.

U.S. crude inventories for the week ended Sept. 10 fell 2.4 million barrel to 357.3 million. That’s the highest level for that week over the past five years.

Chinese consumption and stockpiling purchases may provide support for oil prices at about $65 a barrel, Pervan said.

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