"With crude prices nearing record highs, and fundamentals weakening, we believe that any further upside is unlikely without a supply shock," the bank said in a note.
In fact, higher prices should only work to further weaken fundamentals, suggesting the supply risk premium must continue to grow simply to maintain current prices," it added.
However, it acknowledged that geopolitcal tensions in the Middle East were providing the market with more support than the bank had previously anticipated, prompting the bank to increase its price forecast for 2012.
Morgan Stanley now projects Brent will average $105 a barrel this year, compared to its previous prediction of $100 a barrel. For the latest updates on the stock market, visit Stock Market Today
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