Even with OPEC forecast to keep its output quota unchanged at a meeting this week, falling oil demand and prospects for increased supply from some member states mean the group’s leader, Saudi Arabia, will have to cut production anyway.
Crude prices will probably drop, perhaps as much as 10 percent, if Iranian oil is reintroduced to the world market, Francisco Blanch, head of global commodities and derivatives research for Bank of America Merrill Lynch, said at the Bloomberg Oil & Gas Conference.
Saudi Arabia, the world’s largest crude exporter, will lead OPEC to increase production next year, avoiding a surge in oil prices that could put global economic recovery at risk, Bank of America Merrill Lynch said.
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 Corp.
West Texas Intermediate crude fell for a third day amid speculation that the Federal Reserve will reduce stimulus and after Bank of America’s Francisco Blanch said it will be difficult for WTI to rally much more.
China’s interest-rate cut shows the “urgency of the situation” as slowing growth in the country will trim demand for commodities including metals, Francisco Blanch, the head of commodities research for Bank of America Merrill Lynch said in a television interview on Bloomberg Surveillance Midday with Tom Keene.
There is a “clear trend” for slower economic growth in China going forward, Francisco Blanch, head of global commodity research at Bank of America Corp. said at the Bloomberg Link China Conference in New York today.