Oil prices 'could drop'

13/03/2009

Oil prices could be set to slide over the coming months, according to a forecast from Citigroup.

The US financial services provider has downgraded its earnings forecasts for the oil sector through the remainder of 2009 and into 2010.

Such a move comes as Brent crude price forecasts have also been revised downwards, reports Sharecast.

A statement from the financial services provider said: "Cost cyclicality will drive the economic threshold for the next generation of marginal projects lower."

The group added: "As a result, our earnings forecasts drop by an average 38 per cent this year and 35 per cent next year."

Citigroup has also recast its prediction for 2012, now seeing oil priced around $65 per barrel, rather than the previous expectation of $85 per barrel.

The forecast comes despite crude prices having clawed back much of the seven per cent decline they recently experienced on the New York Mercantile Exchange.