London, Jan. 13 (BNA): Some analysts predict that oil prices, which rose by 50% in 2021, will increase this year, saying that a lack of production capacity and limited investment in the sector could push the price of crude oil to $90 or even above $100. . barrel.
Although the coronavirus variant Omicron has pushed COVID-19 cases far above last year’s peaks, analysts say oil prices will be buoyed by many governments’ reluctance to restore the draconian restrictions that wracked the global economy when the pandemic spread in 2020.
Brent crude futures were trading near $85 on Wednesday, their highest in two months.
Jeffrey Haley said: “Assuming that China is not experiencing a sharp slowdown, that Omicron is already an ohmic gold, and with OPEC+ ability to ramp up production clearly limited, I see no reason why Brent crude should not move towards $100 in the first quarter, perhaps before that.” Senior Market Analyst at OANDA.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, are gradually easing production cuts that were implemented when demand collapsed in 2020.
However, many small producers cannot increase supply, and others fear pumping too much oil in case of renewed COVID-19 setbacks, according to Reuters.
Morgan Stanley expects Brent crude to reach $90 a barrel in the third quarter of this year.
With crude stocks likely to be depleted and spare capacity reduced by the second half of 2022, and limited investments in the oil and gas sector, the market will have a slim margin of safety, the bank said.
JPMorgan analysts said in a note on Wednesday that they could see oil prices rise as much as $30 after the EIA and Bloomberg cut OPEC’s energy estimates for 2022 by 0.8 million barrels per day and 1.2 million barrels per day, respectively.
However, the bank added that it also expects oil prices to exceed $125 a barrel this year, and $150 in 2023.
If OPEC is disciplined and wants to keep the market tight, it could raise prices to $100, said Claudio Galimberti, senior vice president of analysis at Rystad Energy.
However, he said he does not consider this a possible scenario, and while oil could “temporarily” reach over $90 this year, downward pressure on prices will come from production increases in Canada, Norway, Brazil and Guyana.
Oman Oil Minister Mohammed al-Ramahi said on Tuesday that the group did not want to see 100 barrels of oil.
“The world is not ready for that,” Al Ramahi was quoted by Bloomberg as saying.
Higher oil prices, which also drive up gasoline and diesel prices, could keep inflation uncomfortably high into 2022 amid troubled global supply chains, slowing economic recovery from the pandemic in many countries.
Meanwhile, Standard Chartered raised its forecast for Brent crude for 2022 by $8 to $75 a barrel and its forecast for Brent crude in 2023 by $17 to $77.
In a Reuters poll in late December, 35 economists and analysts expected Brent crude to average $73.57 a barrel in 2022, about 2% lower than the median forecast of $75.33 in November. The forecast shows the average price for the year, not the peak.
Brent prices have not touched $90 and $100 since 2014, when they were falling from a high above $115 to $57 by the end of the year.
HF