Jan. 3 (Bloomberg) -- Brent crude may rise above $100 a barrel “sooner rather than later” in the first quarter because of speculation that the global economic recovery will accelerate in 2011, according to analysts at JPMorgan Chase & Co.
“Oil sentiment has turned decidedly bullish, partly driven by unusually cold weather, but more due to an increasingly optimistic consensus view” on the economy, especially for the U.S., analysts led by Lawrence Eagles said in a note to clients.
The market shift is reflected in the biggest increase in the U.S Standard & Poor’s 500 Index in December since 1991 and a jump of almost $9 a barrel last month for Brent, the European benchmark, according to Eagles.
The U.S. benchmark West Texas Intermediate crude rose $7.27 a barrel, or 8.6 percent, in December.
Global demand is on course to surpass pre-recession highs, JPMorgan said. “We are steadily moving back toward the tight market conditions of 2007-2008, where any spike in oil demand requires a corresponding spike in oil price to rein in demand.”
Applications in the U.S. for unemployment assistance decreased by 34,000 to 388,000 in the week ended Dec. 25, breaking the 400,000 level for the first time since July 2008, the Labor Department reported last week.
“The service sector which is concentrated in developed countries is starting to come to life,” shifting oil demand growth from petrochemical feedstocks and towards transport fuels as commuting increases, the analysts said.
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