Oil-price forecast rises

Merrill Lynch expects "robust" demand for energy in 2010

Tom Stundza -- Purchasing, 7/8/2009 2:33:32 PM

Bank of America Securities-Merrill Lynch has increased its price forecast for 2009 and 2010 crude oil prices, citing a weaker dollar, a significant improvement in global liquidity conditions and a slightly tighter-than-expected global oil market balance. The brokerage expects West Texas Intermediate (WTI) crude to average $58.50 per barrel (bbl) in 2009, up from $52 forecast earlier.

This forecast compares with consensus estimates of $55/bbl in 2009 but all these remain below the new $60 forecast of the Energy Information Administration, which projects prices "to rise slowly" as economic conditions gradually improve.

Merrill Lynch analyst Eric Hagen forecasts WTI for 2010 at $77/bbl, up from $62. The consensus forecast is $66/bbl with the EIA forecast at $72.

In fact, Hagen suggests that WTI oil prices may reach $82 by the fourth quarter of 2010 due to shrinking of spare capacity by the Organization of Petroleum Exporting Countries (OPEC), limited growth in non-OPEC supply and--the key--a robust emerging market demand outlook causing more dollars to come into circulation.

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Its amazing the speculators continue there attempts prop up the price of oil, even as oil and gas supplies swell in this economy.

MK - 7/8/2009 5:06:57 PM EDT

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