The Strategist

Bank of America gives oil price forecast for 2022



12/02/2021 - 05:22



US banking giant Bank of America (BofA) predicts the average price of Brent crude will be $85 a barrel next year, the bank's global head of commodities and derivatives research, Francisco Blanch, said.



Greg Goebel
Greg Goebel
"We believe the average price of Brent crude will be $85 next year. This is our official forecast," Blanch said during the bank's webinar reviewing the energy market for 2022.

He noted that the risk of a price spike next year comes from low oil inventories, a recovery in air traffic and a low level of spare production capacity. The downside risk comes from the possible emergence of new strains, the use of strategic oil stocks in the US and a loosening of the Iranian sanctions regime.

He recalled that this year the average oil price is around $70 a barrel. The lowest was in January at $51, the highest was in October at around $86.

"Global oil demand has recovered this year by almost 5.5 million bpd compared to last year, to an average of just over 96 million bpd.... In 2022, we believe demand will continue to recover - we forecast an average global oil demand of 100.5 million bpd," Blanch also said of global oil market demand.

Earlier in November, BofA predicted that the price of oil could reach $120 a barrel by the middle of next year.

The oil price started rising at the end of the summer and consolidated above $80 a barrel, before reaching the $86 a barrel level in mid-October for the first time since October 2018, but then moved downwards. By the end of the month, the price had fallen below $70 a barrel. This followed US President Joe Biden's announcement of the country's use of oil from strategic reserves and the emergence of a new strain of COVID-19. On Wednesday evening a barrel of Brent stands at around $72 a barrel.

source: bloomberg.com




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