BofA Oil forecastBrent oill will hit $120 per barrel by the end of June, Bank of America's commodity
analyst Francisco Blanch said in a research note from Oct 29. The catalyst for BofA's
increased forecast is the same one that has prompted every other bank to turn bullish on commodities. The current global energy crisis that has seen prices for crude oil, coal, natural gas, and LNG skyrocket as the market tightens, which in turn is causing rampant gas-to oil substitution; an increase in air travel only adds to the bullish picture.
Just a month agao, BofA forecast that oil could reach $100 over the next six months, and that was only if we had a "very cold winter". At that time, this was expected to be the most important driver of the global energy markets. Fast forward one month and BofA feels even more confident now that the global oil demand recovery will continue to outpace supply over the next year and a half, resulting in dwindling inventories that set the stage for higher oil prices.
Looking at the recent turmoil in the energy sector, BofA writes that while oil has been playing catch-up to other fuels, petroleum markets have been mostly led by bunker fuel and naphtha since January 2020 as factories, petrochemicals, and trade surged, while refinery run cuts limited supplies. With Covid-19 having a disproportionate impact on mobility, the biggest price laggards in the energy space have been gasoline, jet fuel abd diesel, otherwise the usual summer and winter season leaders.
Yet things have started to change in recent months, with gasoline and distillate demand firming up ahead of winter.
This os how Blanch justifies what would be the highest oil price since the summer of 2008.
We up our oil price forecasts and targets for 2022-2023...
Oil prices have recently risen above $80/bbl, led by gas-to-oil substitution and an increase in air travel. Where will it go next ? Pent-up demand for oil was the main reason we laid out $100 target for Brent in 2022 back in June. Yet we now believe that the run-up in global gas and coal prices has turbocharged the Brent and WTI price recovery. As we look into 2022 and 2023, we still expect oil to move from a steep deficit that has seen global invertories draw ar a rate of 1.2mn b/d in the past 6 months to a more balanced market. Still, structural oil demand and supply rigidities are emerging, and now we forecast Brent and WTI crude oil prices will average
$85/bbl and $75 and $82 and $70 in 2022 and 2023, respectively compared to $75 and $65(for Brent) and $71 and $61 (for WTI) prior