An increasing number of analysts see oil prices averaging below $100 a barrel over the next two years as doubts about medium-term economic growth outweigh concerns about oil supplies, a Reuters poll found.
Twelve of 31 respondents in the monthly survey are forecasting Brent crude will average $100 or less in 2013 and nine of 22 analysts expect $100 or less in 2014.
The results represent a swing from the May poll when only five analysts were forecasting prices at or below $100. The lowest forecast for next year is $79.30 from Nomisma. Barclays has the highest forecast for 2013 at $125.
Oil prices have fallen from the year's peak of $128 for Brent in March to below $92 because of slowing global growth and increased output from Saudi Arabia. Unless prices recover, this year's average will fall short of last year's record $110.90 for Brent.
"The euro zone crisis is impacting not just Western economies but also Asian countries including the BRIC nations," said Nic Brown from Natixis.
"We believe the market is oversupplied with crude even after Iranian oil supply is restricted due to EU and U.S. sanctions."
The drop in prices has caught many forecasters by surprise and some big commodities trading banks have had to steeply adjust their forecasts.
Citi now sees Brent at $99 next year, revised down from $120 and JP Morgan has cuts its forecast to $104 from $125.
"Barring a shift in the macroeconomic picture into outright global recession, OPEC production changes could skew risks to the upside from current price levels for 3Q 2012 and suggests strong support at $80 per barrel for Brent," said analysts from JP Morgan, which had seen Q3 prices at $120 only a month ago.
The Reuters poll showed Brent is expected to average $107.80 a barrel this year, down $7.30 from May in the steepest revision over the past year, as 22 analysts cut their forecasts.
Mean average forecasts put Brent at $107.80 in 2012, $105.10 in 2013 and $104.50 in 2014. Brent is put at $102.90 in the third quarter of 2012 and $104.40 in the fourth quarter.
U.S. crude is seen averaging $94.60 in 2012, $96.60 in 2013 and $99 in 2014.
"U.S. oil production continues to soar with the new supplies of shale oil and ongoing imports from Canada, bringing oil supplies well above previous 5-year averages," said Mark Pervan, from ANZ Research.
Many analysts warned, however, that oil could rebound if Iranian tensions escalated or global central banks decided to embark on a new round of money printing to support flagging economic recovery.
"Our base case still remains for a recovery, albeit delayed, and not a falling away from current levels as seen in 2008-2009," said analysts from Barclays. It has the highest Brent price forecasts of $120 for 2012, $125 for 2013 and $130 for 2014.
"The main upside risk would be a flare-up in tensions with Iran," said Capital Economics' analyst Julian Jessop.
"But weakening demand will make it even easier for other producers to meet any shortfall in supply due to sanctions alone," added Jessop, who has one of the lowest forecast for Brent for 2013 at $85 a barrel. (Additional reporting by Ratul Ray Chaudhuri, Soma Das in Bangalore, editing by Dmitry Zhdannikov, Richard Mably and James Jukwey)