October 23, 2009 / 3:13 PM / 10 years ago

Oil may hit $100/barrel on weak dollar: Deutsche

NEW YORK (Reuters) - Oil prices may surge to $100 a barrel sometime in the next two quarters as the U.S. dollar weakens against the euro, Deutsche Bank (DBKGn.DE)(DB.N) energy economist Adam Sieminski said Friday.

“We think the dollar could weaken further to $1.60 against the euro and it implies pushing oil prices to that threatening triple-digit level,” Sieminski told Reuters.

A weaker dollar could mean “oil prices have even further to run,” but a rise to $100 a barrel may hurt an economic recovery, Deutsche Bank said in a research note.

“We believe that $80 oil is not high enough to derail the global recovery, but our economics team would start looking for weaker overall consumption at $100 a barrel prices,” the note said.

Oil prices rose to a one-year high of $82 earlier this week, after rallying 17 percent since October 10. That rise coincided with a rise in global stock indices and a weakened dollar, which plunged to a 14-month low above $1.50 per euro this week.

Oil, priced in dollars, has been moving in an inverse price relation against the dollar. Global oil and product inventories remain well above average levels.

“The ‘traditional fundamentals’ are improving, but only slowly,” he wrote.

OPEC members could be put in a “difficult position” when they meet in December to consider whether to boost oil production and cool prices.

“OPEC may want to calm the market with more crude, but it’s not clear that refiners have an appetite to take it,” Sieminski wrote.

Deutsche Bank has kept its 2010 oil price outlook at an average $65 a barrel, below today’s price near $81. Sieminski said the lower price outlook was in part due to still high global inventories.

Global oil demand plunged last year amid a financial crisis and after oil prices spiked to a record above $147 in July, before falling to nearly a five-year low near $32 in December.

Reporting by Joshua Schneyer; Editing by Lisa Shumaker

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