Output freeze could push prices up: BofA Merrill
NEW YORK, April 14, 2016
Bank of America Merrill Lynch said that global oil market rebalancing was under way and that prices could soon jump above $50 a barrel if a deal to freeze production results from a meeting in Doha this weekend.
With Russian oil supply declines in view, a freeze would tighten global balances by about 500,000 barrels per day in the second half of the year, the bank said in a note.
Oil prices were seen trading lower on concerns over rising US crude inventories and skepticism around a Doha output freeze deal. US crude was down 0.8 percent at $41.83 at 12:43 pm EDT (1643 GMT), while Brent crude fell 0.9 percent to $44.28. R
BofA, which presented several other scenarios, said that if Saudi Arabia reports further output expansion in response to Iran's return, Brent prices could retreat to the $30-to-$35-per-barrel range.
If no firm agreement is reached in Doha, Brent prices could potentially be pulled back below $40 in the very near-term, according to the bank.
BofA, which maintains its projection that oil would trade above $50 a barrel next year on average, said it did not see prices plunging into mid-to-low $30s.--Reuters
