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Saturday, April 23, 2011

BofAML analytical report forecasts average price of WTI crude oil 2011

BofAML analytical report forecasts average price of WTI crude oil 2011 : In spite of the seemingly conducive environment for crude oil, the market still remains susceptible to any external shocks that might prove adversarial for its current upward trajectory, according to an analysis by Bank of America-Merrill Lynch (BofAML).

The market, nevertheless, counts on the advent of summer driving season in the US and geo-political tensions for short term support. However, crude oil faces a very real danger of crumbling under its own weight during later half of 2011. The retreat could also be accentuated if supplies from Libya will be back online during the time.

The BofAML analytical report mentions of alarming fiscal deficit in the biggest economy of the world. US crude oil demand is at 350,000 barrels per day, a decent amount, but has stooped down from previous year levels, the report showed.

The results from the economic front have also been less than impressive. Economic data showed lesser than expected growth in housing starts, falling non-residential construction spending, weaker core capital goods orders and lower government spending. Data also showed a meagre rise in retail sales and a 1.7 percent decline in vehicle sales. The report projects 110,000 barrels per day increase in OECD North America and 75,000 barrels per day fall in OECD Europe. The demand for diesel in Europe, however, rose 165,000 in the first quarter of 2011 as opposed to the previous quarter.

A string of credit rating downgrades from various rating agencies such as Moody’s, Fitch, and S&P etc dogged the members of 16-nation European Union. Even though global crude oil demand rose during the first quarter of 2011 by 3.5 million barrels per day as per the figures released BoA analytic report, the growth was inferior as opposed to that of the previous quarter.

Crude oil demand in the East, on the other hand, exacerbated with China leading the emerging markets with a 920,000 barrels per day increase in the first quarter of 2011, the report showed. However, the impending real estate bubble in China and the ill effects of rising crude oil prices on India poses a hurdle for smooth rise in demand for the fuel.

Inflated crude oil prices have also affected the global shipping and airline industries. The BoA analytical report pointed out the 10 percent rise in airline fares over the last 6 months. Even though the shipping industry have been able till now to attach rising prices to surcharge, any further rise in surcharge could lead to “demand destruction”, the report added.

The BofAML analytical report forecasts average price of WTI crude at $116 in the 2Q of 2011 and, $104 and $88 for third and fourth quarters of 2011 respectively. Average WTI price of 2011 is projected at $101. For the latest updates PRESS CTR + D or visit Stock Market news Today

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