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Oil Falls From One-Week High; BofA Boosts 2012 Forecsts

Brent oil declined in London after data showed Saudi Arabian crude output at close to the largest level in three decades. U.S. crude advanced.

Futures fell as much as 0.8 percent. Saudi Arabia, the largest producer in OPEC, pumped 9.87 million barrels a day in January, according to data submitted to the Joint Organization Data Initiative. Bank of America Corp. raised 2012 price forecasts after the economic recovery beat expectations.

“There’s no immediate supply shortage,” said Andrey Kryuchenkov, an analyst at VTB Capital in London, who correctly predicted last month that prices had peaked in the short-term. “As Brent gets past $120, market participants start worrying about demand and hence you’re getting extremely choppy trading at the moment. It’s unlikely we’ll see a sustained push higher from here.”

Brent oil for May settlement was at $125.36 a barrel, down 45 cents, on ICE Futures Europe exchange in London. The European benchmark contract was at a premium of $17.58 to New York futures for the same month.

Oil for April delivery was at $107.33 a barrel, up 27 cents, in electronic trading on the New York Mercantile Exchange at 12:06 p.m. London time. The contract, which expires tomorrow, climbed 1.9 percent to $107.06 on March 16, the highest close since March 9. The more actively traded May future gained 23 cents to $107.81 today.

Saudi Output

Bank of America raised its price forecasts for this year to $118 a barrel for Brent crude and to $106 for West Texas Intermediate because of supply constraints, according to an e-mailed report today.

“To reflect better-than-expected global economic conditions and tighter-than-expected supplies, we raise our 2012 Brent and WTI price forecasts,” Francisco Blanch, the bank’s New York-based head of commodities research, said in the report.

While Brent may temporarily rise to $140, further price gains “will prove unsustainable and create risks to the economy,” Blanch wrote.

Saudi Arabia’s January crude output rose 0.6 percent from December and compares with 10.05 million barrels a day in November. The U.S. Energy Department said November’s increase was the largest in at least 31 years.

Oil exports from the kingdom climbed 2 percent in January to 7.5 million barrels, the JODI data show. Shipments by Iran, the second-biggest producer in the Organization of Petroleum Exporting Countries, climbed to 2.3 million barrels, the highest since December 2008. JODI is supervised by the Riyadh-based International Energy Forum and compiles data provided by member governments.

‘Bumpy Ride’

Oil prices will have a “bumpy ride in the months ahead” because of a “slim buffer” of spare crude-production capacity, the International Energy Agency said in its monthly market report on March 14. World oil supplies are “tight” with spare capacity at about 2.5 million barrels a day compared with 3.5 million in 2008 to 2010, U.S. Deputy Secretary of Energy Daniel Poneman said the same day.

Home purchases in the U.S. probably rose in February to the highest level in almost two years, a sign of stabilization in the real-estate market, according to Bloomberg News surveys of economists before reports this week.

“We’re looking at a period of moderate growth in the U.S., and the outlook has picked up,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney who sees WTI trading in a range of about $104 to $108. “If it continues on from here up into $108 plus, that would start to look as though it was making a bit more of a positive statement in terms of breaking resistance from a technical point of view.”

Hedge funds decreased oil wagers on rising prices by 6,188, or 2.5 percent, to 258,406 contracts in the seven days ended March 13, according to the according to Commodity Futures Trading Commission’s Commitments of Traders report.

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