Oil May Drop to $90 Before Rebounding Late in Year, Nordea Says

By Jakob Lindstroem

Aug. 29 (Bloomberg) -- Oil prices may fall to $90 a barrel in the fourth quarter before rallying to reach $105 next year, Nordea Bank AB executives said at a presentation in Stockholm.

``Higher fuel prices and the weaker U.S. economy will hamper demand for oil and drive prices lower before remaining high in the coming two years,'' said Thina Margrethe Saltvedt, Oslo-based global head of commodities research at Nordea.

``Long-term, oil is fundamentally determined by supply and demand, and prices will remain high as we expect Saudi Arabia will not be able to increase production as much as they have indicated,'' Saltvedt said today at the bank's headquarters.

Crude headed for its biggest weekly gain in almost two months as producers evacuated rigs before the arrival of Gustav, forecast to be the largest hurricane in the Gulf of Mexico since Katrina. Oil traded at $117.22 a barrel at 8:29 a.m. in New York. Crude futures reached a record $147.27 in July.

To contact the reporter on this story: Jakob Lindstroem in Stockholm at jlindstroem@bloomberg.net.