With monthly Opec+ decisions and accelerating global economic activity and mobility as immunization programs advance, Brent and WTI are forecasted to average $63 and $60 per barrel (/bbl) this year respectively, said a new BofA Global Research report.

With crude oil markets tightening globally, BofA has increased its 2021 and 2022 oil projections toward the centre of its medium-term oil price band. Meanwhile, BofA sees  see $60/bbl Brent and $57/bbl WTI average crude oil prices in 2022, up from $55/bbl and $52/bbl prior.

“There are a number of reasons to believe that any rally in oil prices to $100/bbl will have to wait until demand recovers more broadly over the coming years. First, US shale oil producers will remain fundamentally short cycle even if less sensitive to 12 month forward oil prices, the time it takes to plan and execute a ramp up in oil production.” BofA said in the report.

“At our new WTI forecast of $57/bbl for 2022, our YoY US oil supply growth projection stands at 750,000 barrels per day (b/d). But if forward WTI prices in 2022 climb up to $67/bbl, we could see a 1.2 million b/d YoY increase in US oil production in 2022.

“Second, EM FX weakness and rising oil prices could soon hurt demand in key consumers.

“Third, ample spare capacity across OPEC+ may encourage cheating at higher prices. And fourth, there is a growing chance of a 2mn b/d Iranian oil come back over the next few quarters.” – TradeArabia News Service