April 12 (Bloomberg) -- Citigroup Inc. raised its 2013 forecasts for Brent and West Texas Intermediate crudes because of higher-than-estimated prices in the first quarter while at the same time predicting “death bells” for commodities’ rally.
Brent will average $104 a barrel this year, up from a previous prediction of $99, according to the report by analysts led by Edward Morse, Citi’s global head of commodities research in New York. Prices will decline from an average $112 a barrel in 2012, the e-mailed report said.
“Fast money flows amid a risk-on rally took Brent to $119 in February, but since then prices have fallen sharply,” the report said. “Citi expects this move lower will continue as fundamentals remain weak.”
Brent for May settlement tumbled $1.97, or 1.9 percent, to $102.30 a barrel at 1:11 p.m. New York time on the London-based ICE Futures Europe exchange. Prices are down 7.9 percent so far this year.
WTI futures will average $90 a barrel in 2013, more than the previous forecast of $85. Prices averaged about $94 last year. WTI for May delivery dropped $2.50, or 2.7 percent, to $91.01 a barrel on the New York Mercantile Exchange.
“Citi expects 2013 to be the year in which the death bells ring for the commodity supercycle after its duly noted sunset, ushering in a new decade of opportunities based on how individual commodities will perform against one another and against broader market indicators such as equities or currencies,” Morse said in the report.
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