With Brent crude oil closing in on $90 per barrel on Wednesday, Bank of America energy analysts have boosted their price forecast for this year to average $86 per barrel and peak this summer at $95 per barrel.
Citing an improving global economic outlook and tightening inventories, Bank of America is sees Brent crude averaging $86 per barrel, up from its earlier forecast of $80, and the U.S. crude oil benchmark, West Texas Intermediate (WTI), averaging $81 per barrel, up from its previous forecast of $75 per barrel.
The predicted summer peak of $95 for Brent is hinged on expectations for a summer driving season against the backdrop of tighter-than-expected supply.
“Low inventories across the oil complex, OPEC+ output cuts, geopolitical tensions, and robust economic growth figures have flipped price trends and now point to a tighter-than-expected summer driving season, supporting firm backwardation in crude and products,” the bank said in a statement carried by the Oil Price Information Service (OPIS), run by Dow Jones & Co.
On the geopolitical front, BoA is focusing on rising tensions between the U.S. and Iran, Russia and Venezuela, as well as the ongoing Houthi attacks on the Red Sea shipping route and Ukrainian targeting of Russian refineries. On the U.S. domestic front, BoA is watching American shale production, which it says is slowing.
The bank also said that OPEC+ output cuts have prompted speculators to pour large amounts of investment dollars into oil.
In terms of global economic outlook, BoA said it expects stronger economic growth to buoy oil markets in the next two quarters of this year.
Also on Tuesday, speaking to Yahoo Finance, Rystad Energy SVP and Head of Global Oil Macro & North America Research Director Claudio Galimberti suggested that OPEC+ cuts and geopolitical tensions could lead to triple-digit oil prices as “OPEC cuts have created a huge deficit” while “demand remains strong.”
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