Merrill Lynch: Oil may fall to $25 next year

Merrill Lynch: Oil may fall to $25 next year
# 05 December 2008 09:28 (UTC +04:00)
Baku. Vahab Rzayev – APA-Economics. rude oil may dip below $25 a barrel next year if the recession that’s slashing fuel demand around the world spreads to China, said Merrill Lynch & Co.
“A temporary drop below $25 a barrel is possible if the global recession extends to China and significant non-OPEC cuts are required,” Merrill Lynch said.
According to the report, in the short-run, global oil demand growth will likely take a further beating as banks continue to cut credit to consumers and corporations.
Merrill reiterated a Nov. 26 forecast that oil futures traded in New York will average $50 a barrel next year. Prices “could find a trough” at the end of the first quarter and undergo a “modest recovery” in the second half as economies strengthen, according to today’s report.
“We expect strong cooperation to emerge” among members of the Organization of Petroleum Exporting Countries as prices fall below $50, Merrill Commodity Strategist Francisco Blanch said. OPEC, producer of more than 40 percent of the world’s crude, was still pumping about 1 million barrels a day more than its official target of 27.3 million barrels a day last month, according to a Bloomberg survey.
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