Oil prices are likely to peak this summer as the loss of Libyan crude production has an increased impact on the market amid rising demand in Europe and Japan, Nomura International PLC said.
Oil has "a potential to spike higher" as European refineries resume after maintenance in coming months while demand may be boosted further by a surge in Japan's electricity needs in the summer, Nomura analysts including Michael Lo said in a recent report. Prices may moderate later in the year amid "reduced global liquidity," the report said.
"Fundamentals will likely tighten in the next few months on increased demand and reduced supply," the report said. "We are penciling in a reduction in geopolitical risk premium over the coming year, which could lead to lower oil prices after the summer."
Investor fund-flows into the market may "dry out" in the next two years on expectations of a stronger dollar and further monetary tightening, the analysts said.
On Thursday, crude for June delivery fell 8.6 percent to $99.80, the lowest settlement since March 16 and the biggest percentage drop since April 20, 2009. Prices are up 10 percent this year.
Oil climbed as high as $114.83 a barrel in New York this year as revolts that overthrew the governments in Tunisia and Egypt raised concern that supplies from the Middle East would be disrupted as protests spread. Fighting between rebels and forces loyal to Libyan leader Moammar Gadhafi has shut 1.3 million barrels a day of output in Africa's third- largest producer.