LONDON - U.S. bank Merrill Lynch cut its oil price forecast for 2009 to $50 a barrel from $90 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 percent for next year, while the bank's commodity analysts now see global oil demand shrinking by 400,000 barrels per day (bpd).
"Our economists have slashed their 2009 forecast to 1.3 percent, a scenario that is consistent with a global recession, and we are now cutting our average WTI and Brent oil price forecast to $50 a barrel for 2009," Merrill Lynch said in a report received by Reuters.
"Also, we see a contraction in global oil demand of 400,000 bpd or 0.5 percent next year."
The bank projects a recovery in oil prices -- which have fallen by almost $100 since hitting an all-time high above $147 a barrel back in July -- in the second half of 2009.
However, the bank predicts that oil prices will average just $43 a barrel and $45 a barrel in the first and second quarters of 2009, respectively.
Oil prices have not traded as low as $43 a barrel since January 2005.
Analysts at Merrill Lynch said prices could fall even further if China's economy failed to match the bank's growth estimate for 2009 of 8.6 percent.
On Tuesday, the World Bank slashed its forecast for Chinese growth to just 7.5 percent in 2009, from a previous forecast of 9.2 percent.
Merrill Lynch analysts said oil prices could be higher than predicted if the world saw "excessively loose fiscal and monetary policies" in response to the global economic crisis.
Merrill Lynch economists have lowered the growth of worldwide gross domestic product (GDP) to 1.3 percent for next year, while the bank's commodity analysts now see global oil demand shrinking by 400,000 barrels per day (bpd).
"Our economists have slashed their 2009 forecast to 1.3 percent, a scenario that is consistent with a global recession, and we are now cutting our average WTI and Brent oil price forecast to $50 a barrel for 2009," Merrill Lynch said in a report received by Reuters.
"Also, we see a contraction in global oil demand of 400,000 bpd or 0.5 percent next year."
The bank projects a recovery in oil prices -- which have fallen by almost $100 since hitting an all-time high above $147 a barrel back in July -- in the second half of 2009.
However, the bank predicts that oil prices will average just $43 a barrel and $45 a barrel in the first and second quarters of 2009, respectively.
Oil prices have not traded as low as $43 a barrel since January 2005.
Analysts at Merrill Lynch said prices could fall even further if China's economy failed to match the bank's growth estimate for 2009 of 8.6 percent.
On Tuesday, the World Bank slashed its forecast for Chinese growth to just 7.5 percent in 2009, from a previous forecast of 9.2 percent.
Merrill Lynch analysts said oil prices could be higher than predicted if the world saw "excessively loose fiscal and monetary policies" in response to the global economic crisis.
