Brent crude prices may fall by half to $50 a barrel if the eurozone debt crisis cascades into a recession similar to the 2008 collapse, Credit Suisse says in a recent report.
In the worst-case scenario, demand would slump, along with trading activity, and any recovery would be "painfully slow,’’ CNBC.com reports, citing Credit Suisse.
Brent crude at $50 a barrel would represent "simply a fatalistic repeat of history on the premise that what was broken three to four years ago has not been fixed,’’ the report says. "Indeed, global imbalances are worse and much of the available political and real capital has merely been squandered in the interim,” Credit Suisse says.
Taking into account plentiful supply of crude and U.S. dollar strength in this scenario, Credit Suisse forecasts a price recovery around $80 by 2013.
Oil was trading near an eight-month closing-low Thursday in New York ahead of an OPEC meeting in Vienna set to discuss possible changes to its output ceiling, Bloomberg News reported. Brent crude for July settlement was trading at $96.74 on the London-based ICE Futures exchange, Bloomberg said.
Still, Brent crude may rebound to average $115 a barrel this year, Mirae Asset Management Co. said in a report, due to geopolitical risk in the Middle East, said Bloomberg.
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