The spot brent crude oil price is at 110.35. The spot WTI crude oil price is at 86.26. The latest oil price forecasts from Bank of America Merrill Lynch has shown that oil prices will average at $104 / barrel for the remainder of 2012. "With Saudi production increasing sharply in recent months and North Sea plus some Libyan output coming back on line, the market should remain well supplied in 4Q11. Net, we see limited near-term upside on Brent given that OECD demand growth has been negative since 2Q11," points out BofA. Although EM demand growth is still resilient, it has also decelerated as a result of the tightening monetary policy cycle that started in the middle of last year. As a result, oil price forecasters stick to the view that Brent crude oil prices will average $102/bbl in 4Q2011. Looking ahead to 2012, monetary policy is already on an easing mode around the world, creating upside risks to the average Brent price forecast of $114/bbl in 2012. "In the US, our economists think Operation Twist is very likely and see a 50% chance of QE3. The ECB seems to have turned 180 degrees and markets are now discounting an interest rate cut. With Brazil and Turkey lowering rates in anticipation of a potential Greek default, central banks around the world may be setting the stage for higher oil prices over the next 5 years," say Bank of America. With Brent hovering around $95/bbl in Dec-15 and gold for the same maturity trading at $1,869/oz, the next three months could provide a great entry point for long positions in long-dated oil contracts.

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