Oil prices will return to above $80 per barrel in the second half of this year. This could continue rising toward $90 due to a deepening supply deficit at Francisco Blanch. This is what the head of commodities research at Bank of America has been telling Bloomberg Television on Friday.
This quarter will be a little weaker, with oil prices averaging in the mid-$70s, Blanch said.
“We’ll get back up over $80 in the second half of the year toward $90. The deficit is going to get deeper over the course of the next six to nine months”. This is what the BofA’s head of commodities research was mentioning.
The supply deficit becomes wide due to the OPEC+ cuts and the lack of response from U.S. shale. This is as seen in previous cycles as Blanch was noting.
“Demand will eventually turn around and get a little better in the developed markets. So those three things start to push inventories lower again into the year-end and into 2024, and that’s what gets you higher in terms of prices,” he added.
Analysts in the latest monthly Reuters survey also see prices rising toward $90 per barrel by the end of this year, driven by Chinese demand and a tightening market following OPEC+’s latest production cuts.
So far this year, Brent prices have averaged around $82 per barrel.
Earlier this week, the International Energy Agency (IEA) said that the decline in oil prices over the past few weeks contrasts with an expected tightening of the market later this year when demand is set to exceed supply by nearly 2 million barrels per day (bpd).
Since the middle of April, oil prices have lost all the gains from OPEC+’s latest announcement of new production cuts.
Source: Oil Price
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