Merrill Also Thinks Oil Could Go To $25

By Matthew Hougan

Apparently, I'm not the only one who thinks oil could go to $25/barrel.

Along with a number of readers who wrote in agreeing that $25/barrel oil was a possibility (and quite a few who did not), Francisco Blanch, head of commodities research at Merrill Lynch in London, warned on Friday that "a temporary drop below $25 is possible if the global recession extends to China."

The FT covers the story here.

Blanch expects oil prices to average around $50/barrel next year, which the FT says is one of the lowest estimates on Wall Street. The consensus figure, according to a late-November Reuters poll, is $71.83/barrel.

With the NYMEX January contract for oil falling to $40.81/barrel on Friday, the "consensus" now calls for a 76%+ rally in the price of crude. Impressive bullishness, if you ask me. Imagine if the Wall Street consensus called for a 76% rally in the S&P 500 next year; people would be calling the analysts "nuts."