Citigroup raises 2006 oil futures forecast

Investment bank sees average price at $60 a barrel, up from $51, on lack of spare production and supply woes.

SINGAPORE (Reuters) – Investment bank Citigroup hiked its forecast for U.S. oil futures prices this year to $60 a barrel, up from an estimate of $51 previously, citing a lack of spare production capacity and the risk of supply disruptions.

“The resilience of the oil market leads us to lift near-term oil price assumptions and with it earnings expectations for the sector,” Citigroup said in a report, also lifting its 2006 forecast for London Brent crude futures by $9 to $57.50.

Last week, oil major Royal Dutch Shell posted record results for 2005 and Exxon Mobil Corp. reported the most profitable year in U.S. corporate history.

Rising tension between Iran and the West over the OPEC producer’s nuclear programme, output disruptions in Nigeria and Iraq, and growing demand leading to tightly stretched supplies have boosted prices, which have averaged $65.57 so far this year.

Reuters