London, 22 December 2011: Reuters

Leading oil analysts have issued a clutch of mostly small downgrades for 2012 Brent prices in the latest Reuters survey, but for the most part banks and traders stuck with earlier predictions. Predictions in the December survey are particularly important because they are the last out-of-sample forecasts before the forecast period begins, so they provide the best test of accuracy.

Of 30 institutions which provided forecasts in both November and December, 22 left their predictions unchanged, suggesting most analysts' expectations are firmly set, despite the uncertainty surrounding the European debt crisis and rising political risks in key producing states including Iran, Iraq and Kazakhstan.

But there were six downgrades, of which the largest were Bank of America-Merrill Lynch (down $6 per barrel to $108 per barrel), LBBW (down $7 to $93) and Prestige Economics (down $12 to $103). Only two forecasters raised their predictions, JBC Energy and First Energy, both by less than $2.

The mean forecast was $105.21, trimmed $1.82 compared with the November survey. Downgrades were in line with weakening front-month prices over the last month, which were $2.40 lower than in the period running up to the last survey. The typical forecast remains close to recently realised prices.

For the second year running, the analyst team at Goldman Sachs are the standout bulls ($120), while experts at Capital Economics ($88), Petromatrix ($88.75) and Bernstein ($90) lead a small pack who think prices will fall significantly in 2012.

The other major commodity banks are predicting prices will remain broadly unchanged from 2011 ($111), with Bank of America-Merrill Lynch ($108), JPMorgan ($112), Barclays ($115) and Deutsche Bank ($115) all expecting Brent to remain close to current levels on average over the next twelve months.

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By John Kemp, Reuters market analyst – for Commodities Now with permission.

The views expressed here are his own.