Oil prices are expected to fall below $100 per barrel in the second half of 2011, according to a new report by Bank of America Merrill Lynch.
The bank believes that potential fiscal tightening in the US as well as Libyan supplies coming back on line will end the recent rally that has seen Brent crude rise to over $120 a barrel.
"With the first signs of demand destruction on the horizon and credit risks on the rise, we keep our view that Brent will average $94 a barrel in the fourth quarter of 2011. In particular, we believe that the downside risks to oil prices will grow as EM yield curves continue to invert, QE2 comes to an end in the United States, and issues such as debt restructuring in the European periphery start to materialise," the report said.
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