BNP Cuts Crude Oil Price Forecasts by 18% on Economy

By Angela Macdonald-Smith

Oct. 10 (Bloomberg) -- BNP Paribas SA, France's biggest bank, cut its forecast for 2009 U.S. crude-oil prices by 18 percent, citing a downgrade to its economic outlook.

Prices for West Texas Intermediate, the benchmark U.S. oil variety, may average $95.20 a barrel next year, down from an earlier forecast of $115.80, BNP Paribas said in an Oct. 9 report. It trimmed its 2008 forecast by 5.5 percent to $104.40, and its 2010 estimate by 11 percent to $105.60.

Crude oil futures in New York fell as much as $4.59, or 5.3 percent, to $82 a barrel, and headed for the biggest weekly decline since December 2004, pacing a slump in commodities on concern the deepening financial crisis will push the global economy into a recession. BNP Paribas cut its forecast for 2009 U.S. economic growth to a decline of 0.1 percent from a gain of 1.5 percent.

The economic slowdown in Organization for Economic Cooperation and Development countries ``is not only to be deeper than expected but more protracted,'' the bank said in the report. The oil market ``is still searching for a bottom as the turmoil in financial markets, far from settling in the past month, moved up a notch with fallouts in the financial sector spreading to Europe.''

The OECD is made up of 30 countries committed to democracy and market economics, including the United States, the U.K., France, Germany and Japan.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net