If you have no idea whether an asset will go up or down, the current market price is a pretty good place to make a guess. After all, markets are generally pretty efficient. So with oil hovering just over $50 per barrel, we’re not surprised to see Merrill Lynch peg its 2009 oil forecast at… $50 per barrel:
Reuters: Merrill Lynch cut its oil price forecast for 2009 to $50 a barrel from $90 a barrel on Wednesday, citing weaker prospects for global economic growth and a contraction in world oil demand.
Merrill Lynch economists have lowered the growth of worldwide gross domestic product (GDP) to 1.3 per cent for next year, while the bank’s commodity analysts now see global oil demand shrinking by 400,000 barrels per day (bpd).
At least by offering a price target, the firm put itself on the line and can be judged against that. Goldman just decided to get out of the oil forecasting game altogether, so there’s no way they can be wrong.
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