Strategist Says $1500/oz Gold Will Lead Oil Above $100/bbl

BofA Merrill Lynch commodity strategists Francisco Blanch issued his outlook on the 2010 energy market today, saying gold could lead oil above $100 per barrel in 2010 or early 2011.

The firm said "as EM Central Banks increase their allocations to gold and push prices above $1500/oz, oil prices should follow. WTI crude could break $100/bbl by late 2010 or early 2011."

The firm said loose monetary policy and a weaker USD should put upward pressure on crude oil prices next year. They now see oil prices averaging $85/bbl for 2010 and 2011 and to $80/bbl for 2012+.

On natural gas, the firm sees some upside to US gas in the 2nd-half of 2010, but no re-coupling with oil. They are sticking to their 2010 forecast of $6/MMBtu relative to a forward of $5.40/MMBtu. In 4Q10, they see US nat gas prices rising to an average of $7.60/MMBtu, 27% above the forward.

On coal, the firm said an economic recovery may push thermal coal above $100/t

Related ETFs:

• SPDR Gold Shares (NYSE: GLD)
  
• United States Oil Fund LP (NYSE: USO)
  
• United States Natural Gas (NYSE: UNG)
  
• Market Vectors Coal ETF (NYSE: KOL)

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