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According to A/S Global Risk Management’s latest Quarterly Oil Market Report, prices will increase over the coming period – but at a slower pace than anticipated at the start of the year.

Global Risk's Oil Market Analyst, Thorbjørn Bak Jensen, along with the company's Middle East market analyst, Caner Seren Varol, have revised their oil forecast down on the back of market uncertainty, a slower economic recovery and lower inflationary pressure.

Global Oil Strength Index (GOSI)

The index has decreased by 3 points this quarter to 59. This is primarily based on the following conclusions:

Fundamentals: Oil prices supported by decent refining margins on both heating oil and gasoline.

Financials: Unloading speculative positions put pressure on oil. However, positions are still relatively high and sustained growth and inflationary pressure support financials.

Geopoliticals: Increased tension with Iran and nationalisations by Chavez support prices, whilst increased production in Nigeria dampens the effect.

The Global Oil Strength Index, or GOSI, was introduced by Global Risk in its last quarterly report. The GOSI is a single number between 0 and 100 that signals Global Risk Management’s expectations for the development of oil prices. A reading below 50 indicates a declining trend and above 50 an increasing trend.

Global Risk calculates the GOSI by assigning a strength rating or index for each of three factors (Fundamentals, Financials and Geopoliticals) and then calculating a weigthed average based on the three strength ratings.

Oil Price forecast

Based on its calculations, Global Risk estimates that the price of Brent crude will reach 78.6 USD/bbl in 2010 and 90.5 USD/bbl in 2011.