BofA Raises Oil Price Forecasts for 2016

Bank of America-Merrill Lynch has revised upward its oil price forecasts for 2016, but said it remained bearish amid oversupply, weak demand from emerging markets, a return of US shale production and expectations of a deal on Iran.

The bank raised its outlook for Brent next year to $62 per barrel from $58, but kept its WTI outlook unchanged at $57, as it expects only a moderate draw in global inventories.

For 2015, BofA saw Brent averaging $58 per barrel and WTI at $53. The bank had previously forecast Brent at an average of $52 this year, and WTI at $50.

"In part, we have upped our average Brent forecasts for 2015 more so than our WTI numbers because crude oil inventories in the OECD outside North America look more balanced," the bank said in a note dated April 24.

BofA is the second bank after Societe Generale to increase its oil price forecasts amid a rally in US oil prices over the past month.

A year-on-year fall in US production was unlikely until the fourth quarter of 2015, the bank said.