Deutsche Bank on WTI and Brent; Omicron and supply Deutsche Bank on Impact of Omicron, Potential 2022 Oversupply on Oil Prices
08:28 AM EST, 12/03/2021 (MT Newswires) -- Deutsche Bank on Friday said that the about $12/bbl fall in Brent prices over the last week will prove to be an overreaction to concerns about the new omicron variant of the coronavirus and potential 2022 oversupply.
Deutsche Bank's James Hubbard said crude inventories remain below five-year averages while extreme upstream capex discipline persists. Several OPEC members are already struggling to meet their quotas and a return of Iranian volumes is nowhere in sight, Hubbard added.
Underlying global oil demand has clearly been undented by 18 months of COVID-19 and the threat of electric vehicles remains a post-2030 issue at the earliest, according to Hubbard.
If omicron causes enhanced lockdowns, Hubbard said the mRNA platform offers a likely rapid vaccine response and OPEC has proven capable of managing supply as required over the last 18 months.
Deutsche Bank reaised its 2022 Brent assumption by 18% to $75/bbl, i.e. 12% above the post-Omicron news forward curve. Its 2022 EPS forecasts rise by an average of 17% and it raises PTs by an average of 14%.