ETF News

UPDATE 1-BofA-Merrill Lynch ups 2010 US oil forecast to $85

* BofA-ML ups 2010 U.S. crude forecast to $85 bbl vs $75

* Expects oil demand in 2010 to be above 2008 levels

* Oil price at risk of spike above $100 in 2011

LONDON, Nov 13 (Reuters) - Bank of America-Merrill Lynch raised its 2010 U.S. crude oil CLc1 price forecast on Friday to $85 a barrel, from its previous estimate of $75.

The U.S. bank said in a note on Friday that its revision follows a stronger than expected rebound in world economic recovery, which led it to also revise up its GDP and oil demand forecasts.

BofA said it now sees global GDP growth recovering strongly to 4.3 percent and 4.5 percent in 2010 in 2011, respectively, from minus 0.8 percent in 2009, following a bout of growth surprises.

The bank also raised its oil demand projection on Friday.

“Driven by our above-consensus call on global GDP growth, we now see global oil demand growth at 2 million barrels per day (in 2010), from 1.4 million bpd previously. That increase would put average expected 2010 oil demand above that of 2008 in level terms.”

BofA-Merrill Lynch joins a number of other major forecasters that have raised oil price estimates over the last 6-months as signs of economic recovery raised optimism over potential future oil price increases.

For a Reuters poll on oil price forecasts click POLL70. For a story on the poll click [O/POLL].

Oil CLc1 hit a record at nearly $150 a barrel in July last year. It then collapsed to less than $33 last December, but has since recovered to around $77.

Goldman Sachs raised its oil price forecasts in June, predicting a U.S. crude price of $85 by the end of 2009 with an average 2010 price of $90 as demand continues to pick up next year.

BofA-Merrill Lynch said on Friday that it expected the oil price rally to continue beyond next year and prices could again break above $100 a barrel. “As we have been flagging for some time, the combination of tighter physical oil supply and demand fundamentals, loose monetary policy, and a weaker U.S. dollar are creating a growing risk for oil prices to spike above $100 as we head into 2011,” the note said.

BofA-Merrill Lynch also revised its forecast for Brent crude oil LCOc1 on Friday to $85 a barrel from $75 previously. (Editing by William Hardy)