Commodity analyst at RBS have given their latest oil price forecasts. Brent crude is expected to weaken as we move into next year. Indeed, today's price of 112 USD a barrel is well above the mean price of 107 that has been called for 2011. So, what lies behind the latest oil price forecasts at RBS? This months 'Commodity Companion' note says: "Brent crude surged higher in H1’11 above $125/bl as the MENA crisis unfolded and is already drifting lower with positive news out of Libya raising hopes of oil restarts. "Saudi Arabia’s policy of oil price moderation is key and it has raised output to 9.8mb/d. OPEC’s spare capacity at 3.8mb/d is 9% above the 10-year average. "We also expect rising Iraqi output to weigh on the price. Brent is forecast to average $95/bl in 2012, a 12% fall you." Commodities a main stream asset Commodities have come of age and are now a mainstream asset class in the opinion of Nick 'Metals' Moore at RBS. "As financial markets wrestle with extreme market turbulence, commodities have emerged as a bastion of hope. China’s voracious appetite for commodity imports has played a pivotal role with prices of iron ore, thermal and coking coal close to record levels. Gold and silver have provided classic safe-haven protection," writes Moore. Industrial metal prices, though down slightly from end 2010, have been impressive with the RBS Base Metal Price Index averaging January-August 2011 26% higher than the comparable period of 2010. While financial markets continue to wallow in uncertainty, there is support for commodities: "Factors riding to the rescue for commodities include emerging market demand growth, supply disruptions, the weakness of the USD, maintenance of loose monetary policy, warehouse metal financing deals and physically backed precious metal ETFs," says Moore.

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