UPDATE 2-Barclays cuts 2011, 2010 oil price forecasts

* Trims 2010 forecast by $4, cuts 2011 by $7

* Cites “macroeconomic disquiet” for forecast downgrade

(Adds details, further quote)

By Alex Lawler and Chris Baldwin

LONDON, Aug 26 (BestGrowthStock) – Barclays Capital (BARC.L: ), one of
the most bullish banks on the oil market outlook in recent
years, has cut its oil price forecasts for 2011 and this year,
citing concern about the economy.

The bank cut its 2010 price forecast for benchmark U.S.
crude (CLc1: ) by $4 a barrel to $78 and reduced its 2011 forecast
by $7 to $85, it said in a report on Thursday.

“There is enough fundamental strength to support prices
above the $70 which is increasingly looking like a minimum for
the basic health of the industry, but there is also enough
macroeconomic disquiet to make any breakout of prices to the
upside difficult to sustain,” the report said.

Other forecasters have been trimming their price outlooks in
the face of rising oil inventories — which are at a record high
in top consumer the United States — and concern about the
strength of economic recovery and future demand.

A Reuters poll released earlier this week showed forecasters
revising down their expectations of the average oil price for
this year for the fourth consecutive month. [O/POLL]

U.S. crude was expected to average $78.63 in 2010 and $83.84
in 2011, the poll of 31 analysts, banks and government agencies
showed. The price has averaged around $76 so far this year and
traded at $73.44 at 1553 GMT on Thursday.

In the report, Barclays cut its third-quarter 2010 price
forecast by $8 to $76 and reduced the fourth-quarter prediction
by $9 to $78.

Barclays’ previous 2011 forecast of $92 was more than $8
above the consensus in the poll.

The bank said prices could prove to be firmer than expected
should sentiment about the economy become more optimistic or if
political tension over Iran and in Iraq — both major oil
exporters — worsened.

“However, at the present time the momentum for macroeconomic
sentiment still appears to be towards the more pessimistic, but
perhaps not towards the completely apocalyptic,” it said.

“The other main source of upside to the forecast remains the
geopolitical environment, and in that regard we remain concerned
that the current dynamics of both Iran’s external relations
and Iraq’s internal stability are not moving in a benign
direction.”
(Editing by Alison Birrane)

UPDATE 2-Barclays cuts 2011, 2010 oil price forecasts