The brokerage now expects Brent crude oil to trade in a range of $100-$120 and to average $110 for 2012, up from its previous forecast of $86 per barrel, which was set in August.
In 2011, about 1 million barrels per day of supply has been curtailed from Azerbaijan, Canada, China, Colombia, Mexico, the North Sea, Russia, Kazakhstan, Syria, the US, West Africa and Yemen," analysts led by Faisel Khan wrote in a note to clients.
A combination of these supply disruptions along with Libyan export disruptions has left European oil inventories at extremely low levels, the analysts said.
The analysts also believe that tensions between Israel and Iran, the EU embargo on Iranian oil, sanctions on Syria, succession and the possibility of strife in Saudi Arabia, elections in Venezuela and Angola, and ongoing violence in Nigeria and Yemen will help push up crude oil prices.
Citigroup, however, lowered its near-term price target on US natural gas due to the extremely warm start to this winter along with continued growth in production. For 2012, the brokerage cut its composite US spot natural gas price forecast to $3.85 per million British thermal units (mmbtu) from $4.35 per mmbtu.
Among the energy majors, Citigroup expects Chevron to have the most visible production growth in next several years and raised its price target to $124 per share from $107 per share, maintaining a "buy" rating on the second-largest US oil company.
The brokerage also raised its price target on Exxon to $97 per share from $88 per share, as it expects the company benefit from the tight LNG supply-demand situation following the Japanese nuclear outages and higher prices in European natural gas market. It maintained its "buy" rating on the stock.
Citigroup, however, downgraded Occidental Petroleum Corp to neutral citing valuation.
It also revised its price target on ConocoPhillips, Hess Energy, Imperial Oil Ltd and Marathon Oil.
