bank of america upgrades crude for 2012

UPDATE: BOfA Merrill Lynch Ups 2012 Brent, Nymex Crude Forecast
Last update: 3/19/2012 6:33:27 AM
--BOfA Merrill Lynch raises crude price amid lower recession risk, tighter supply
--Bank expects Brent to average $118 a barrel in 2012, Nymex crude $106 a barrel
--Temporary oil price spike to $140 a barrel possible in 2012, bank says
(Adds bank comment, detail.)
LONDON (Dow Jones)--Bank of America Merrill Lynch (BAC) said Monday it has raised its Brent and Nymex crude price forecasts for 2012 as the risks of a global double dip recession have diminished considerably while supply has tightened since December.
"But we also doubt that oil prices can continue to escalate from here without creating economic damage in some of the most vulnerable oil-importing economies around the word," the bank said in its Global Research report.
BOfA Merrill Lynch raised its Brent crude price forecast for 2012 to $118 a barrel from a previous forecast of $110 a barrel, and Nymex crude price forecast was increased to $106 a barrel from $103 a barrel.
In 2013, it expects Brent to average $120 a barrel.
But the bank said there is a natural cap on further oil price gains in the absence of a geopolitical event, as energy as a share of gross domestic product--especially in emerging economies and countries like Spain and Italy--is already high.
"Thus, while we see oil prices temporarily hitting $140 a barrel at some point this year on improved demand and tight supplies, we also believe any additional gains will prove unsustainable and create risks to the economy," the bank said.
-By Konstantin Rozhnov, Dow Jones Newswires; +44 207 842 9956; [email protected]
(END) Dow Jones Newswires
March 19, 2012 06:33 ET (10:33 GMT)