Alan Gelder, head of downstream research for Wood MacKenzie, said demand for oil would likely continue to increase in 2013, which would keep crude markets bullish unless some unexpected shock occurred, such as a new economic downturn or trouble in the Middle East.
"Price influencers have moved beyond fundamental market forces and are now driven by global economic uncertainty, geopolitical issues and changes to supply outlooks," Gelder told the APPEC 2012 conference. "Economic events such as a eurozone recession could decrease the demand for crude oil thereby weakening prices."
Wood MacKenzie said in a written statement that higher demand from the Asian, Indonesian and Indian oil and chemical sectors would gobble up more and more crude and support higher prices regardless of increased production from OPEC.
Gelder also said prices were being influenced by geopolitical considerations even more than by traditional supply-and-demand fundamentals. He also predicted heavy crude prices would be swayed by upgraded refineries coming on line while light crude would be impacted by increased production of so-called tight oil supplies in the United States.
But Gelder cautioned that even a boost in U.S. production was unlikely to trump world tensions when it came to the futures markets. "Geopolitical factors can affect major supply countries such as Iran, Syria, Sudan and Iraq, which has an impact greater than the projected growth in U.S. tight oil production," he said.