June 21, 2021
-OilPrice.com
Expectations that strong demand recovery would outpace supply in coming months could lead to oil prices briefly hitting $100 per barrel in 2022, BofA Global Research said in a note on Sunday, as carried by Reuters.
“We believe that the robust global oil demand recovery will outpace supply growth over the next 18 months, further draining inventories and setting the stage for higher oil prices,” analysts at BofA wrote in the note, in which they significantly raised their price forecasts for average Brent Crude prices next year.
According to the bank, Brent Crude will now average $68 a barrel in 2021, compared to an earlier estimate of $63 per barrel. BofA sees the Brent price averaging as much as $75 a barrel in 2022, up from a previous forecast of $60 per barrel.
BofA Global Research expects the global oil market to continue to be undersupplied in the next year and a half, seeing an average supply deficit of 900,000 barrels per day (bpd) over the next six quarters, the bank’s analysts said.
With these new outlooks on the oil market, BofA becomes the latest forecaster to not rule out the possibility of $100 oil in the near future.
David Tawil, president of Maglan Capital, told Fox Business last week that “incredible demand,” inflation, and shareholder pressure on oil supermajors to drastically cut emissions could lead to an oil crisis within three years, with very high oil and gasoline prices. Oil prices are set to rise “consistently and considerably now into the end of the year,” Tawil said.
The world’s largest independent commodity traders are also bullish, not ruling out $100 oil.
Although oil may not be headed to a new supercycle, prices still have room to rise from current levels because of a strong demand rebound and expected tightness in supply, top executives at Trafigura, Vitol, and Glencore said at the FT Commodities Global Summit last week.