Barclays steeply cut its oil price forecasts on Wednesday, becoming the last of the big banks active in commodities to abandon its bullish stance in the face of soaring U.S. oil output and sluggish global demand.
The cut from Barclays, which has for several years predicted an oil rally as demand outpaced supply, came as the bank's long-serving head of commodities research, Paul Horsnell, left the company, two sources familiar with the development said.
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Barclays declined to comment on changes in personnel.
"The global supply system is poised to accommodate the expected growth in global demand without significant stress," Barclays analysts said in a note.
The note added that an early resolution of the Iranian situation and recovery in its export volumes, a slowing of China's recovery or an interruption to the nascent recovery of U.S. oil demand could all force down the price of oil.
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Barclays was the only bank in the last Reuters monthly poll to maintain its 2013 Brent price forecast above $120 a barrel after rivals including Goldman Sachs, Morgan Stanley and Citi all cut their bullish predictions in recent months.
The big U.S, banks are usually the most upbeat on oil prices, but Goldman steeply cut its forecasts last October, calling an end to the oil price super-cycle and reversing years of bullish recommendations. It cited a rise in unconventional oil supplies in the United States and Canada.
S&P Goldman Sachs Commodities Index has brought investors weak returns in the past two years and the biggest banks have reduced their exposure to commodities, with trading revenues halving to $7 billion from their peak five years ago.
Barclays said that range-trading in oil will continue but said it we would caution against becoming overly bearish about the oil price.
"OPEC's ability to cushion unforeseen supply disruption remains strictly limited," it said.
It also said it expected the Israeli government to start calling for tougher international action against Tehran if the West failed to reach a deal over Iran's nuclear program.