Bank of America (BofA) Global Research has cancelled the oil price forecast for 2020 and 2021 as the demand recovers from the outbreak, producers slashing the capital expenditure and OPEC+ supply cut is ongoing. As Brent crude oil averaged $43.70/barrel, higher from previous estimation of $37, the central bank predicted next year's average price will be at $50/barrel and reaching $55/barrel in 2022. For WTI crude oil, the bank foreseeing an average of $39.70/barrel this year from $32/barrel in the previous year, and increasing to $47/barrel and $50/barrel in 2021 and 2022 respectively. Brent futures were traded approximately at $42.17, Monday June 22, and U.S crude was at $39.54.
The bank believes that demand for transportation will recover at a faster rate in 2021 and OPEC+ feasibly hold back larger supply volumes.
As most regions are likely on a falling inventories pattern in the second half of 2020, the Brent crude oil could curve to the backwardation by year-end. The oil market also expected to record a deficit of around 2.5 million barrel/day until the end of the year, while lowering down to 1.7 million barrel/day deficit by next year.
But the projections will be contravened if production increases along with the rising prices or there is a second wave outbreak on a significant scale. The simultaneous lockdown on a global scale might not be going to happen, but localized measures will persist.
