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Oil Risk Premium Will End: Analyst
Published:Tuesday, 3 May 2011 | 2:50 AM ET
Oilprices are heading back towards the $80 - $100 a barrel sweet spotwhich will boost oil stocks and take pressure off the global economy,according to Jens Zimmermann, a senior equity analyst at ABN AMROPrivate Banking in Zurich.
Predicting that the Middle East turmoil willquieten down in the second half of the year, Zimmermann told CNBC onTuesday that the "unrest premium" should be removed in the second half.
“ABNsees a $15-$20 per barrel risk premium in current oil prices, not somuch related to actual physical disruption, but more to the potentialthat unrest could still affect Saudi output,” he said.
Inthe second quarter Brent will average $120 a barrel with WTI trading at$110 a barrel in Zimmerman’s view but then fall back in the second halfto $105 and $95 dollars.
An“oil price correction into the $80-$100/bbl ‘sweet spot’ would be goodnews for energy stocks, as it would remove the current threat ofpossible ‘demand destruction’, which increased the volatility for energystocks,” said Zimmermann.