Bank of America (BofA) Global Research has lifted its oil price forecast for this year and next as demand recovers from coronavirus-linked shutdowns, the OPEC+ output cut deal curtails supply, and producers slash capital expenditure.
The bank now sees Brent crude oil averaging $43.70 per barrel in 2020, up from a previous estimate of $37. In 2021 and 2022, the bank forecasts average prices of $50 and $55 a barrel respectively.
For WTI crude, BofA expects an average price of $39.70 per barrel this year, compared with $32 previously, and average prices of $47 in 2021 and $50 in 2022.
“As we head into next year, we believe transportation demand could recover at a faster rate than we initially anticipated,” the bank said in a note. “We also think that OPEC+ will likely hold back larger supply volumes than we anticipated three months ago.”
It expects the oil market to register a deficit of 2.5 million barrels per day (bpd) in the second half of 2020 and 1.7 million bpd in 2021.