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Denmark-based A/S Global Risk Management has forecast a 'slight increase' in oil prices over the next three months.

Global Risk estimates that the average Brent price during the third quarter of 2013 will be at $106 per barrel. The company says that oil prices have experienced a setback due to financial turmoil and slower than expected growth in Chinese macro figures. For the coming quarter Global Risk forecasts a slight increase in prices and expects seasonal increases in demand and continued unrest in the Middle East to outweigh bearish news.

"Pulling things in the other direction is the market fear of QE3 ending sooner rather than later – we humbly disagree with market consensus," Global Risk commented in the report.

The Global Oil Strength Index (GOSI)

The Global Oil Strength Index, or GOSI, was introduced by Global Risk in 2010. 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.

Fundamentals – covering the supply and demand balance.
Financials – covering speculators’ interest and the development of the financial market.
Geopolitics – covering the situation in unstable oil producing regions of the world.

Fundamentals: Rating: 45 (-10 vs April 2013). Though the summer season is likely to bring an increase in demand, there is an extraordinary surplus in supply. As a result, Global Risk has set fundamentals as bearish for oil prices.

Financials: Rating: 50 (-10 vs April 2013). Global Risk says that the main financial driver at the moment is the possible tapering of QE3 in the U.S. The company's view however, is that this will not happen within the third quarter of this year. Therefore financials have been set as neutral for oil prices.

Geopoliticals Rating: 60 (same vs April 2013). Fear of unrest spreading from Syria or Iran to other Middle Eastern countries makes the geopolitical situation bullish for oil prices, says Global Risk.

GOSI - Rating: 52 (-13 vs April 2013) - The GOSI remains above the 50 level, indicating that Global Risk's oil price expectation is bullish.

Average price forecasts:

Brent Crude (US$ per barrel)

Q3 2013 - 106
Q4 2013 - 108
Q1 2014 - 109
Q2 2014 - 108

3.5% Rotterdam Barges (US$ per tonne)

Q3 2013 - 597
Q4 2013 - 606
Q1 2014 - 616
Q2 2014 - 610

0.1% CIF NWE Cargoes (US$ per tonne)

Q3 2013 - 890
Q4 2013 - 901
Q1 2014 - 907
Q2 2014 - 900

380cst Singapore Cargoes (US$ per tonne)

Q3 2013 - 616
Q4 2013 - 635
Q1 2014 - 641
Q2 2014 - 632

0.5% Singapore Gasoil (US$ per tonne)

Q3 2013 - 887
Q4 2013 - 901
Q1 2014 - 909
Q2 2014 - 901

3% US Gulf Waterborne (US$ per tonne)

Q3 2013 - 591
Q4 2013 - 603
Q1 2014 - 610
Q2 2014 - 606

N2 Heating Oil (US$ per tonne)

Q3 2013 - 920
Q4 2013 - 916
Q1 2014 - 915
Q2 2014 - 905