Baku - APA-Economics. Brent oil prices will tumble $31 per barrel by the end of the first quarter as global petroleum inventories continue to build, Bank of America Merrill Lynch analysts forecast on Thursday, Reuters reported.
“First and foremost, the contango in the Brent market is reaching epic levels last seen in 2009. This means stocks all over the world are building at a very fast rate," the bank said in a research note.
The bank said it had raised its storage numbers and expects OECD inventory levels to reach 2.83 billion barrels in the second quarter.
In the short run WTI crude might trade above Brent to push barrels into Cushing, Oklahoma, the delivery point for the U.S. futures contract, said the bank, which sees WTI at $32 per barrel at the end of the first quarter.
BofA lowered its average 2015 Brent price forecast to $52 per barrel from $77 and its WTI price outlook to $50 from $72. It sees 2016 average prices at $58 for Brent and WTI at $57 per barrel.
"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," the bank said.
Bank of America Merrill Lynch analysts said last week Brent prices could reach $40 per barrel in the near term. They said to find a floor the oil market would need to see non-OPEC supply curtailments, OPEC output cuts, or stronger global demand, but none of those conditions were expected in the near future.
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