Bank of America: Oil Could Hit $160 by Year-End

Oil prices have jumped to 2 ½-year highs this week, and the party may just be getting started. Bank of America Merrill Lynch says Brent crude could hit $160 a barrel this year, as global demand expands and Libyan oil remains offline, CNBC reports.

That level would represent a 31 percent gain from $122 Tuesday morning. BofA sees a 30 percent chance of that target being reached.

“Commodity prices should move broadly higher in 2011 on robust economic growth in emerging markets, despite relatively weaker growth in developed markets,” Sabine Schels, a commodity strategist at BofA, wrote in a research note.

Oil refinery workers (Getty photo)

“With oil demand expanding rapidly and Libya production down by at least 1 million barrels per day, we forecast (the) Brent crude oil price to average $122 a barrel in the second quarter.”

Brent could break through $140 in the next three months, she says. And, “Under our upside risk scenario, Brent prices could average between $125 dollars a barrel and $160 this year.”

Goldman Sachs sees things differently. In a research note Tuesday, it said oil will soon see a “substantial pullback,” The Wall Street Journal reports.

Things are much different now than in 2008, when prices last hit these levels, Goldman analysts say. “Both inventories and spare capacity are much higher now, and net speculative positions are four times as high as in June 2008.”

Late Wednesday, U.S. crude for May delivery settled up 86 cents at $107.11 a barrel. In London, Brent May crude was up $1.89 to $122.81.