With the U.S. dollar continuing its prolonged slump, UBS Securities has taken another look at its commodities price estimates, both short and long term.

Andrew Potter, analyst with UBS, has found grounding the oil price in fundamentals a "frustrating" exercise.

"Cheap money, a weak U.S. dollar and increased risk tolerance seem to be the main drivers of oil prices but are very tough to capture in any formal forecasting process," he said in a note.

Still, Mr. Potter has raised the 2010 forecasted price for West Texas Intermediate to US$75 a barrel (all prices in U.S.) from $70/b while the long-term estimate for 2011 to 2013 increases to $80/b.

Meanwhile price estimates for natural gas in 2009, 2010 and normalized NYMEX have been brought down to $4/million British thermal units, $6.25/MMBtu, and $7/MMBtu from $4.50/MMBtu, $7/MMBtu and $7.50/MMBtu respectively. The revisions stem from changing fundamentals, including a slower than forecast decline in U.S. production and industry plans to ramp up activity before year-end, Mr. Potter said.

Mr. Potter has also upgraded his ratings on several companies. Canadian Natural Resources and EnCana Corp. get bumped to a Buy from Neutral, while Imperial Oil Ltd. moves to Neutral from Sell. Husky Energy also gets downgraded to Neutral from Buy.

Eric Lam