Multiple investment banks have raised their crude oil price forecasts for the year, indicating a delayed respite from high prices.
Bank of America analyst Paul Ciana pointed out in a note that West Texas Intermediate (WTI) oil has been trending bullish of late, suggesting that prices might move higher. WTI oil rose to $130 per barrel in March, after which it cooled down. However, prices are now rising, which indicates that oil now has momentum behind it, he said.
Historically, prices have tended to move higher when WTI breaches $115 a barrel, the analyst stated, while noting that prices have been trading above this level since the beginning of June. WTI crude has risen by 61.50 percent year-to-date, as of June 9.
Barclays raised its Brent crude price forecast by $11 per barrel in 2022 and by $23 in 2023, citing a bigger and sustained disruption in Russian oil supply following EU sanctions. Oil output in Russia is predicted to fall by 1.5 million barrels per day by the end of this year. Brent crude is expected to average $111 per barrel in 2022, with WTI averaging $108.
Financial services firm UBS is also expecting near-term oil prices to remain elevated, with factors like summer demand from the Northern Hemisphere and China’s economic reopening acting as support.
“The negative global growth impulse remains insufficient to rebalance inventories at current prices,” Goldman analysts said, according to Bloomberg. “Oil prices need to rally further to normalize the unsustainably low levels of global oil inventories.”
Goldman calculates that oil needs to average $135 per barrel in the 12 months from July for global oil inventories to normalize by late 2023.
Prices for the company’s northwestern Europe and Mediterranean customers were also raised. Prices for Aramco’s U.S. customers remained unchanged.