Since the beginning of 2021, the fast restoration of oil prices has become one of the most discussed topics. Since January 1st, the price of a barrel of Brent has grown by 26.4%, and of a WTI barrel — by 29.5%. However, the analysts of the Bank of America claim that this is just the start, and in a couple of years, oil will return to 100 USD per barrel.
What does the Bank of America forecast?
On February 24th, Bloomberg announced that the BoA had prepared a new report on the perspectives of the commodity market. According to the forecasts, the growth of oil prices until 2024 will be the highest since the 1970s.
Experts say that until 2026, a barrel of Brent will cost 50-70 USD on average. However, later on, if the price keeps growing as fast, it might leap up to 100 USD.
Mind that the BoA revised its forecasts for 2021, increasing the expected price from 50 to 60 USD. As for WTI, experts say it will stay under 57 USD this year. Note that since the beginning of the year, Brent price has grown by 26.4%, WTI — by 29.5%.
Why will oil prices grow?
In the BoA, they say that the fast recuperation of the demand for this commodity is indicated by the speed of the restoration of global industrial production and export. Moreover, the OPEC agreement is working, and extremely cold weather in Texas helped balance oil supply and demand.
The Chinese economy is growing more rapidly than any other one. Mind that China is the world's largest importer of commodities. Don't forget the global vaccination campaign, as well as the large-scale stimulation program in the USA — all this influences the oil market positively.
Are there other forecasts?
Not only the BoA experts are expecting Brent futures to grow to 100 USD. Analysts from Socar Trading SA agree with such forecasts and even claim that they will come true sooner. They're sure that oil prices will reach this level in 2022-2023.
Goldman Sachs experts are also looking positively to the future. Last week, they revised their forecast for 2021: in April-June, Brent price should reach 70 USD per barrel, in July-September — 75 USD per barrel. Also, the demand is expected to return to its pre-pandemic level of 100 million barrels a day.
However, not all analysts are so optimistic about the future of the oil market. Many of those questioned by Bloomberg claim that Brent price is likely to remain at 65 USD per barrel until 2025.
What are OPEC+ countries planning?
The nearest meeting of OPEC+ is planned for the first half of March. It'll be devoted to the agreements on the decrease in oil production.
Many experts say that as long as the quotations are growing, some participants might suggest raising production by 500,000 barrels a day. However, OPEC has already announced officially that the next month, production limits for member countries will remain the same – 22.1 million barrels a day.
Oil prices are reaching the highs never seen in the last 13 months. Many large financial entities, including Goldman Sachs, JPMorgan Chase, and the Bank of America, increased their forecasts for 2021.
In the Bank of America and Socar Trading SA, they’re sure that in the next couple of years, oil quotations will be growing impressively fast, reaching 100 USD per barrel. However, the opposite opinion is that in the next five years, oil prices will stay under 65 USD.