Newspaper article The Evening Standard (London, England)

Cairn Gets a Boost as UBS Predicts $200 Oil

Newspaper article The Evening Standard (London, England)

Cairn Gets a Boost as UBS Predicts $200 Oil

Article excerpt


HARD-PRESSED motorists have suffered almost 30 consecutive days ofrecord fuel prices at the pumps, but there are few signs of things improving.

In fact, it looks as if petrol and diesel will continue rising in the monthsahead.

Broker UBS is forecasting that the price of a barrel of oil will reach $200within seven years, echoing similar forecasts by Goldman Sachs, with extremeprice volatility continuing.

UBS has also raised its forecast for the prices of Brent crude and West TexasIntermediate dramatically, with demand continuing to outstrip supply.

The broker expects the price of Brent to average $113.50 this yearan increase of 30% on its previous forecastrising dramatically to $120 on average next year (a 52% increase on itsprevious forecast), before easing back to $116 in 2010. West Texas Intermediateis pitched at $115 a barrel this year, rising to $120 next year.

The broker has also lifted Cairn Energy, up 109p at 3497p, from neutral to buyand jacked up its target price from 3250p to 4500p. Cairn Energy, with huge oilreserves in Rajasthan, is one of its top sector picks.

Shares generally struggled to make headway, with the market still digestingBank of England Governor Mervyn King's bleak view of the economy. He warnedthat the good times are over and hinted that there is every likelihood ofslipping into recession. The FTSE 100 index was down 30.2 at 6185.8.

Royal Bank of Scotland fell 54 1 4 p to 265p after the shares went ex- rightswith the nil- paid trading at 66p, after briefly touching 78p. British Energyeased 1 2 p to 678p. The board was meeting today to consider the takeoverapproach from France's state-owned electricity supplier EDF, which is believedto have offered 650p a share. Word is the board will hold out for a higheroffer.

It was the first day of dealings on AIM for independent stockbroker Share,owner of The Share Centre.

Shares were offered for subscription at 27p, valuing the company at [pounds sterling]43. …

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