Merrill Lynch’s oil analysts say oil will rise above $100 a barrel next year because of our monetary policy and resurgent oil demand from emerging markets.
Merrill sees oil going to $82 in the fourth quarter of 2010, if not higher warning of an “upside risk” according to Bloomberg, who got a copy of their weekly report.
“Without firm policy action to reduce global oil demand or an unexpected expansion in supplies, a continuation of extremely loose monetary policy in OECD economies next year could ultimately bring about another spike in oil prices well above $100 a barrel as we approach 2011,” the report said.
Then, of course, if we get an oil spike, Merrill warns of risks to the economy and recovery:
“A vicious cycle of rising oil prices, rising capital inflows in emerging markets, continued emerging market currency appreciation and in turn higher emerging market commodity demand could trigger a sharp deterioration of terms of trade in OECD economies, putting the fragile global recovery at risk,” the analysts said in the report.
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