Brent prices are expected to average $106.82 a barrel in 2022, the monthly Reuters poll showed on Thursday-and that's the highest average oil price forecast in the survey so far this year, as the West is scrambling to replace Russian oil supply.
In the previous May survey by Reuters, nearly three dozen economists and analysts expected that Brent Crude prices would average $101.89 per barrel in 2022.
So far this year, Brent Crude prices have averaged $105 per barrel, while they were at $115 early on Thursday after OPEC+ rubberstamped a 648,000 bpd oil production increase for August, with which the group will have unwound all the 9.7 million bpd cuts from May 2020.
The analysts surveyed by Reuters in June expect the U.S. benchmark, WTI Crude, to average $102.82 per barrel in 2022, up from the $97.82 a barrel consensus in the poll from May. Early on Thursday, WTI Crude traded at $107 per barrel.
An economic slowdown could temper oil price spikes, analysts said, but they expect tight supply to outweigh concerns about demand.
The experts polled by Reuters expect global oil demand to continue growing this year, with responses ranging from a growth of 2.3 million bpd to 5 million bpd in 2022 compared to 2021. Next year, growth is expected to continue, at around 2 million bpd-2.3 million bpd, according to the analysts.
Many analysts also pointed out that OPEC+ is producing below its targets and is unlikely to start hitting those targets as several producers, especially OPEC's African members, struggle with a lack of capacity and/or investment. Dwindling spare capacity was also cited as a sign of a tight market.
"Crude oil remains rangebound on a continued battle between macroeconomic focused traders, selling "paper" oil through futures as a hedge against recession, and the physical market where price supportive tightness remains," Ole Hansen, Head of Commodity Strategy at Saxo Bank, said in an analysis on Thursday.
"We still believe - and fear - that worries about demand destruction will be more than offset by supply constraints," Hansen added.
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com:
Charles is a writer for Oilprice.com More