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Buy Crude, Could Hit $160: Bank of America

Following Goldman Sachs' negative call on crude prices which took the wind out of the commodities rally this week, Bank of America Merrill Lynch is predicting a 30 percent chance that Brent crude could hit 160 dollars a barrel in 2011.

AP

“Commodity prices should move broadly higher in 2011 on robust economic growth in emerging markets, despite relatively weaker growth in developed markets,” said Sabine Schels, a commodity strategist at BoA Merrill Lynch in London in a research note.

“With oil demand expanding rapidly and Libya production down by at least 1 million barrels per day, we forecast (the) Brent crude oil price to average 122 dollars a barrel in the second quarter, and believe prices could briefly break through 140 dollars in the next 3 months,” she said.

Given the risks from the situation in the Middle-East and North Africa, Schels says there is a chance the price could go even higher over the next 2 months.

“Under our upside risk scenario, Brent prices could average this year between 125 dollars a barrel and 160 dollars a barrel,” Schels said.

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