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Oil Prices Will Surprise Markets in 2012: Blackstone’s Byron Wien

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Blackstone Vice Chairman Byron Wien released his 27th annual market predictions list and the most "surprising" prognostication centers on oil prices. He tells The Daily Ticker's Aaron Task that oil could drift to $85 a barrel, about a 15 percent drop from oil's current price. Many economists are predicting that oil will stay above the $1oo per barrel mark as tensions between Iran and the West heat up. (See: $100 Oil Is Here to Stay, but Iran Closing the Strait of Hormuz "Can't Happen": Stuart)

"U.S. will produce more oil this year than last year," asserts Wien. Domestic natural gas production will increase (otherwise known as "fracking" - a highly controversial way of producing energy) and more oil from Libya and Iraq will lead to a price decline, he says. Moreover, world-wide demand for crude will soften as global growth slows.

President Obama has expressed his support for more domestic energy production, mentioning both natural gas and offshore drilling in Tuesday night's State of the Union address.

"The prospect of the U.S. becoming less dependent on Middle East oil is a game changer," says Wien. "It's a big deal."

According to the Energy Information Administration, the U.S. imported 11.8 million barrels of petroleum per day in 2010. The biggest suppliers to the U.S. were Canada, Mexico, Saudi Arabia, Nigeria and Venezuela last year; OPEC countries accounted for 51 percent of net U.S. petroleum imports.

Overall, Wien's "Surprises of 2012" lean to the bullish side. He says the U.S. economy will get its "second wind" and he expects real growth to exceed three percent this year. Europe will experience a "mild" recession and financial contagion to the global banking system will be avoided, he notes. U.S. markets should break out of their trading slump, and the S&P 500 Index could settle above 1,400 with profit margins and corporate earnings staying strong, he says. (For Wien's reaction to the latest FOMC statement see: Byron Wien See the Bright Side of the Fed' 2014 Pledge)

The financial soothsayer acknowledges that many of his annual predictions have been wrong, and last year was no exception. He says he gives his own forecasts a 50/50 chance of happening.

Here are some of Wien's other predictions:

  • The U.S. housing market bottoms in 2012
  • The yield on the 10-year U.S. Treasury note rises to 4 percent
  • The computer becomes the principal weapon of terrorists and geopolitical adversaries and the number of cyber attacks increases
  • President Obama wins re-election
  • Bashar al-Assad's 11-year rule in Syria ends