Oil price could reach $100 per barrel next year: BofA Global Research

Bank of America (BofA) Global Research has raised its Brent crude price forecasts for this year and next, in light of improving oil demand as economic activity ramps up around the world following the COVD-19 crisis.

The bank raised its Brent crude oil price forecast to $68 per barrel this year, from $63 earlier. Next year, it expects Brent to average $75 per barrel versus its earlier estimate of $60, although tighter oil supply and demand balances in 2022 could push oil briefly to $100.

“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,” BofA said in a note dated Sunday.

The oil market will likely remain in deficit for the foreseeable future, averaging a shortfall of 0.9 million barrels per day (bpd) over the next six quarters, it said.

However, BofA expects consumption growth to grow at the fastest rate since the 1970s, seeing growth of 5.6 million barrels per day (bpd) this year and 3.6 million bpd in 2022.

While demand is set to recover at a rapid pace in the coming months, the bank warned that ample OPEC+ spare capacity and a likely return of Iranian production to the market will cap oil prices this year.

@RGNonline