Brent crude rises above 36 112 post Barclays Cap note

North Sea Brent jumped more than USD 1 per barrel on Tuesday after Barclays Capital raised its forecasts for crude oil in 2012, outweighing worries over the global economy.

ICE Brent futures for August rose USD 1.43 to a high of USD 112.82 before easing back to trade around USD 112.25 by 1100 GMT. US crude was up 60 cents at USD 95.54 per barrel from Friday's close. US financial markets were closed on Monday for the July 4 national holiday.

Barclays Capital on Tuesday raised its 2012 forecast for Brent by USD 10 to USD 115 per barrel, and upped its 2012 forecast for US crude by USD 4 to USD 110. The bank said in a note it left its Brent forecast for 2011 unchanged at USD 112 but cut its 2011 forecast for US crude by USD 6 to USD 100.

"The increase in expectations is due to a forecast further reduction in global spare capacity in 2012, together with a significant intensification of the geopolitical background to the oil market," Barclays Capital said.

"Our detailed 2012 supply and demand forecasts show a continuation of robust emerging market demand," it added.

The Barclays Capital report helped the market reverse losses that had pushed Brent down to an early low of USD 110.45.

Deutsche Bank said earlier it cut its forecasts for Brent in 2011 to USD 114 from USD 117.50, and for 2012 to USD 117 from USD 117.50. It said it expected Brent to climb to USD 125 in 2015.

US light crude futures were expected to average around USD 100 in 2011, Deutsche Bank said.

Commodities markets are concerned about the outlook for the global economy, the Greek debt crisis and a stronger dollar.

China, the world's second-biggest oil consumer and a major consumer of commodities, is experiencing a slowdown in economic growth, sounding warning bells across financial markets.

Ratings agency Moody's said on Tuesday that China's local government debt may be 3.5 trillion yuan (USD 540 billion) larger than estimated, which could make banks liable for deeper losses and threaten their credit worthiness.

China Worries

The news follows data last week showing China's factory sector grew at its slowest pace in 28 months in June, fuelling fears of a big drop in demand, which could impact suppliers worldwide.

"Almost all the economic data is weak and demand data is also poor. China is always a concern for oil markets because the country is such a big consumer," said Christophe Barret, global oil analyst at Credit Agricole.

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Brent crude rises above 36 112 post Barclays Cap note
Brent crude rises above 36 112 post Barclays Cap note

US light crude futures were expected to average around USD 100 in 2011, Deutsche Bank said. Commodities markets are concerned about the outlook for the global economy, the Greek debt crisis and a stronger dollar. China, the world's second-biggest oil



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