Brent oil prices may “push higher” in the next three months as stimulus measures by governments in the U.S., Europe and China boost global demand while supply growth is constrained, according to Bank of America (BAC:US) Corp.
The supply of oil is growing at a slower rate than demand, Francisco Blanch, head of commodities research for Bank of America Merrill Lynch, said today in an interview Singapore. While crude supplies are increasing about 1 percent a year, global economic growth is rising at 4 percent, he said, maintaining his forecast for Brent prices to average $110 a barrel next year.
“Oil remains heavily constrained from a supply perspective,” said Blanch. “We’re only starting to see the impact of various policy measures coming from the U.S. and Europe. All of that is going to play out to the end of the year and the first quarter, so we remain constructive on crude prices.”
Brent for December settlement on the ICE Futures Europe exchange fell 45 cents, or as much as 0.4 percent, to $105.25 a barrel at 6:01 p.m. Singapore time today. Prices have fallen 2 percent this year.
China’s new leaders could announce additional measures to stimulate its economy after the change of leadership, boosting the country’s demand for commodities including oil, gold and agricultural products, Blanch said. However, any extra stimulus by the new Chinese government would not be as large as in 2008, he said.
Commodities as measured by the Standard & Poor’s GSCI Spot Index is headed for an annual loss of 3.2 percent this year, the first since 2008, as the global economic growth slowed, paring demand outlook for everything from crude to metals.
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