Americas News
Bank of America Merrill Lynch Predicts $31 Brent by the End of Q1
Bank of America Merrill Lynch (BofAML) analysts are predicting that the price of Brent Crude will fall to $31 per barrel by the end of Q1 2015, Reuters reports.
The ongoing global supply glut is expected to be the driver in the continued downward movement of prices, and means Brent could fall to its lowest point since April 2004.
The bank also lowered its overall projections for 2015 to $52 per barrel from $77, with 2016 forecasts resting at $58 per barrel.
Ship & Bunker data has previously shown that the price of bunkers in major ports usually sits between 70 and 75 percent of the cost of Brent, which mean that at 7.53 barrels per metric tonne (pmt) for oil, $31 Brent would price bunkers at $163 pmt to $175.
The bank's estimates for West Texas Intermediate (WTI) also took similar dives to $50 from $72.
"Naturally, as storage capacity fills up in any inventory-constrained commodity, prices have to work a lot harder to create a short-run supply or demand response," BofAML said.
BofAML said that it expected Organisation for Economic Co-operation and Development (OECD) inventory levels to reach 2.83 billion barrels in the second quarter, with those numbers unlikely to fall unless both Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC countries reduce output.
In December Saudi Arabian oil minister Ali al-Naimi said that the OPEC would still not cut its production output even if the price of oil were to hit $20 per barrel.
