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Denmark-based A/S Global Risk Management says it expects slightly increased oil prices on a quarterly basis compared to 2013 during the course of this year.

In its latest report, entitled 'The Oil Market - Annual Outlook Jan 14', the company says that the shale oil boom in the United States is unlikely to result in dramatically lower oil prices in 2014, but points out that it has helped prevent a significant increase in oil prices following supply disruptions in Iran, Libya and South Sudan.

Commenting on the next 12 months, Global Risk said: "Will the shale oil boom in the U.S. result in dramatically lower prices? Not likely. The increased shale oil production has, however, helped prevent a major oil price spike, as supply disruptions occurred in Iran, Libya and most recently South Sudan. Demand growth seems to be here to stay as emerging markets’ demand more than offset the drop from western countries. The world’s largest individual consumer, United States, has commenced tapering of the bond buying programme, QE3, based on improving economic numbers – our estimate is that the program will not end before the beginning of 2015 at the earliest. All in all, for 2014, we expect slightly increased prices on a quarterly basis compared to 2013."

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 weighted 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 Q1 2014 - Rating: 55 (-5 vs October 2013). Global Risk says that shale oil was the main fundamental theme in 2013. "It helped prevent major oil price spikes, but it will not be a revolution for oil prices in 2014. Demand growth is here to stay."

Financials Q1 2014 - Rating: 45 (-5 vs October 2013).

Geopoliticals Q1 2014 - Rating: 60 (+10 vs October2013). According to Global Risk, there are still various issues that remain in the geopolitical scene:: "The yo-yo production in Libya is likely to continue. Oil fields in South Sudan have been taken by rebels. The 6-month 'ceasefire' between the U.S. and Iran seems to be merely a time-out."

GOSI - Rating: 53 (same vs October 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)

Q1 2014 - 110
Q2 2014 - 112
Q3 2014 - 112
Q4 2014 - 112

3.5% Rotterdam Barges (US$ per tonne)

Q1 2014 - 600
Q2 2014 - 629
Q3 2014 - 632
Q4 2014 - 635


0.1% CIF NWE Cargoes (US$ per tonne)

Q1 2014 - 933
Q2 2014 - 953
Q3 2014 - 954
Q4 2014 - 954

380cst Singapore Cargoes (US$ per tonne)

Q1 2014 - 624
Q2 2014 - 643
Q3 2014 - 652
Q4 2014 - 657

0.5% Singapore Gasoil (US$ per tonne)

Q1 2014 - 913
Q2 2014 - 928
Q3 2014 - 928
Q4 2014 - 928

3% US Gulf Waterborne (US$ per tonne)

Q1 2014 - 597
Q2 2014 - 622
Q3 2014 - 629
Q4 2014 - 632

N2 Heating Oil (US$ per tonne)

Q1 2014 - 946
Q2 2014 - 969
Q3 2014 - 969
Q4 2014 - 975