Oil Prices Hit Historic High On Weak Dollar

While next year’s oil prices may be lower than this year’s, a sharp downturn in prices is not in the cards in 2014, according to Barclays analysts.

“The oil market is in the midst of a turning point for fundamentals,” wrote Barclays analysts in a note to clients today. Non-Opec supply growth will exceed global demand growth this year for the first time since 2002, and “we expect that to widen much further, to around 500,000 bbl/d in 2014.”

But this will have a relatively modest impact on prices. The bank predicts that 2014 Brent prices will average roughly $4.00 per barrel less than in 2013, while West Texas Intermediate prices will decline by even less – about $1.50/bbl.

“There is a train of thought that the sharp acceleration in US crude oil supply growth will sooner or later result in a turning point for oil prices and a possible price collapse, our analysis suggests 2014 is too early for that,” the note said. “The unstable situation in the Middle East means that next year the risks of an oil price spike are still much greater than the likelihood of a big move lower.”