NEW YORK, May 18 (Xinhua) -- The risks facing international oil markets over the next 12 months are not fully reflected in current oil prices, which have high chances of moving to extremes, said a report by Bank of America Merrill Lynch on Friday.
Brent crude oil prices could slip to 50 U.S. dollars per barrel in a global economic downturn while the benchmark price of crude oil futures could spike to 90 dollars per barrel if a cyclical global demand upturn coincides with a boost of marine fuel demand from new regulations by the International Maritime Organization starting from 2020, said the report.
Brent oil price of front month futures fluctuated in the range of 70 dollars per barrel to 75 dollars per barrel since early April after rebounding from multi-year low of 50.47 dollars per barrel set on Dec. 21, 2018, according to data with Chicago Mercantile Exchange.
Brent crude oil options for December 2019, which is a tool to hedge risks, only imply a 10 percent chance of oil price spike above 90 dollars per barrel and a 6 percent chance of price slump below 50 dollars per barrel, said Bank of America Merrill Lynch.
Oil options markets are ignoring supply-side risks amid balanced oil inventories and this apparent price stability is deceiving, noted the report.
Crude oil supply by the Organization of the Petroleum Exporting Countries (OPEC) and its allies dropped 2.3 million barrels per day from November 2018 to April 2019 while global oil demand growth was averaged at 680,000 barrels per day in past two quarters in comparison with 1.46 million barrels per day in past five years, said the report.
The apparent ceiling of crude oil prices could be attributed to both reduced Chinese purchase and bearish demand signals, said the Austria-based research firm JBC Energy in a recent report.
If it weren't for "strong U.S. supply growth and a sluggish economic/demand performance," international oil prices might have refreshed new year-to-date highs given attacks on oil infrastructure facilities and grave geopolitical tensions in the Middle East, according to JBC Energy.
"But let's not forget, on the thus far still minor chance of a full escalation in the Middle East, there is not much that would stop prices from reaching the highs of last year and maybe even spike beyond," added JBC Energy.
Brent crude oil price once topped 86 U.S. dollars per barrel in early October 2018 on concerns of supply slump from Iran.
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