Bank of America cuts 2010 oil demand, price forecast

An oil pump is seen on the shore near Santa Cruz del Norte, Cuba June 5, 2008.

LONDON (Reuters) - Bank of America Merril Lynch on Tuesday cut its oil 2010 demand growth forecast to 1.5 million barrels per day from 2.0 mbpd on an anticipated slowing in global growth in the second half of the year.

"Current market action is pricing in a more muted demand recovery in the (European) region on the back of lower consumption and investment growth," the bank's commodity strategist Francisco Blanch said in a note to investors.

U.S. crude oil futures on Tuesday dropped by more than $2 to around $67 a barrel on growing concern that Europe's debt crisis could derail the global economic recovery, prompting investors to sell riskier assets and fly to dollar safety.

The bank also lowered its U.S. crude oil price forecast for the second half of 2010 to $78 per barrel from $92.

"The rapidly weakening euro is a deflationary event and will likely translate into a smaller-than-expected USD global economy and lower USD oil prices," BofA-ML said.

Bank of America also revised its non-OPEC supply data. New fields in Brazil, Kazakhstan, Russia, Norway, West Africa and the Gulf of Mexico contributed to almost 700,000 bpd to global supply in 2009, the highest growth in five years, the bank said.

"For 2010, we now see non-OPEC supply expanding by 583,000 bpd, or 1.1 percent annually, to 52.1 mbpd compared to our previous estimate of 1.0 percent growth," the bank said.

In a Reuters poll compiled ahead of the revised Bank of America data, 33 analysts said oil would average $80.22 a barrel for 2010, down slightly from the April poll at $81.06.

(Reporting by Chris Baldwin; Editing by Amanda Cooper)

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