Oil May Test $100 by Year-End as Global Recovery Strengthens

Benchmark oil prices will likely gain this week after data showed the U.S. housing market recovery is accelerating and China's economy displayed signs of stabilizing after its worst slump since the global financial crisis, according to CNBC's latest survey of oil market sentiment.

Some of those surveyed also said U.S. crude futures may challenge $100 a barrel before the year is out.

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More than half, or five out of nine respondents in the expanded survey, said prices will rise this week. Two forecast a decline, while two expect prices to remain unchanged.

U.S. crude futures on Thursday hit a one-week high at $92.12 a barrel and have gained 17 cents over the course of the week.

Brent crude, however, slipped by a little over $2.00 a barrel last week. Goldman Sachs, in a note to clients on Thursday, cut its Brent price forecast for 2013 to $110 a barrel from $130, citing an increasing outlook for supply outside of the Organization of the Petroleum Exporting Countries.

Still, short term outlook remains positive, supported by recent global economic data while supply disruption threats from the Middle East are providing a continued bullish theme.

"The world economy will be upward looking and global demand will rise," said David Kotok, chief investment officer at Cumberland Advisors, who helps manage assets totaling about $2.1 billion, and has a 'bullish' recommendation on oil. "Geopolitical risk remains. Prices are headed higher."

U.S. builders started construction on homes in September at the fastest rate since July 2008 and made plans to build even more homes in the coming months, according to Commerce Department data last Wednesday.

"The Housing Index in the U.S. is strongly outperforming the S&P 500, along with the Banking Index holding up," said Dhiren Sarin, chief technical strategist, Asia-Pacific at Barclays Capital. "We view these as leading sectors for improving market sentiment in general. Crude oil should remain well supported as Brent returns towards the $114.30/$115.00 area."

Meanwhile, China's economy slowed for a seventh straight quarter in July-September, missing the government's target for the first time since the depths of the global financial crisis, Reuters reported on Wednesday. GDP grew 7.4 percent in the third quarter from a year earlier, the National Bureau of Statistics (NBS) said, in line with forecasts from economists polled by Reuters.

Still, industrial production, retail sales and investment data were all slightly ahead of forecasts and quarter-on-quarter GDP growth was strong, suggesting the worst may be over for the world's second-largest economy.

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"I believe the global economy has hit at least a medium-term bottom for now," said Sean Hyman , editor of The Ultimate Wealth Report. A "bottoming out" of copper, steel and the CRB Commodity Index in the June-September period may be the prelude for increased global demand which may be reflected in GDP data "in the next quarterly reading or two," Hyman said.

"Therefore, I believe that oil's downside is very limited versus its upside potential. So I'm still bullish overall."

However, not everyone agrees China's economy will stage a strong recovery. "Chinese growth is bottoming out but that doesn't mean that growth is re-accelerating," said Warren Gilman, CEO of CEF Holdings. "We will likely see growth continue to muddle along at these levels for the next several months."

Jason Hughes, head of premium client management for IG Markets Singapore, added: "Despite the economic data improving in the U.S. and China, we still feel supply is plentiful for crude and demand will remain relatively subdued. I still think we will tick lower and head back below $90 a barrel by month end."

That said, 88 percent of IG markets' clients are holding long positions, or bets on higher prices, on Nymex crude, while clients favor holding a short position, or bets on lower prices, on the Brent contract.

In an interview with CNBC at Singapore International Energy Week, Maria van der Hoeven, Executive Director of the International Energy Agency, reiterated the theme of ample global oil inventories.

Global oil markets are "sufficiently well supplied" but "some tensions" are emerging in the refined products market, she said.

Last week's China data reflect the impact of stimulus action taken over the course of the year and suggest to some that further accommodative policy may not be necessary, which may be a negative factor for risk assets like commodities.

"The data...will lower the stimulus push," said Phil Flynn, senior market analyst for Price Futures Group in Chicago, who has a 'bullish' recommendation for U.S. crude futures next week.

"Yet I think we will overlook that when Spain will inevitably ask for its bailout. It looks like we are making a seasonal low and a head and shoulders formation that suggests that is likely that oil (WTI) should make a run towards $100 later in the year."

However, ANZ analysts said market participants must still remain cautious even though the China data didn't disappoint. "News that Chinese crude runs reached a new record high daily reading of 9.43 million barrels a day should be supportive, but general uncertainty over global oil demand and easing supply concerns will likely weigh on crude markets," ANZ said in a note on Friday.