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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Bank Of America Sees $70 Oil By Summer

Brent Crude prices could hit $70 a barrel in the second quarter of 2021, while they are set to average $60 this year, Bank of America said this week, raising its average price outlook by $10 a barrel from its previous projection.

Easy monetary policy in major economies, as well as tighter oil supply due to the OPEC+ production cuts and the Texas Freeze, are the key drivers of Bank of America Global Research’s increased price forecasts for both benchmarks this year. While Brent Crude is seen averaging $60 throughout this year, the U.S. benchmark, WTI Crude, is expected to average $57 in 2021.

“The big Texas freeze in the past week should reduce global inventories by an additional 50 million barrels, further supporting (oil) prices,” BofA said in a note dated Monday, as carried by Reuters.

Oil prices erased earlier gains and traded lower at 9:35 a.m. ET on Tuesday, with WTI Crude still above $61 and Brent Crude above $65 a barrel.

Oil prices spiked on Monday on a slow restart of U.S. oil production lost in the Texas storm and analysts upgrading their forecasts, predicting a tighter market and prices rallying faster and higher on expected lower inventories.

Echoing Bank of America, Morgan Stanley also sees Brent touching the $70 mark this year, but a bit later—in the third quarter, expecting “a much-improved market,” including on the demand side.

On Sunday, Goldman Sachs started the investment banks’ upgrades of oil price forecasts, expecting Brent Crude prices to hit $75 a barrel in the third quarter this year, on the back of faster market rebalancing, lower expected inventories, and traders hedging against inflation.

Goldman Sachs forecast Brent Crude prices reaching the $70 a barrel mark during the second quarter of this year, and hitting $75 in the third quarter. Goldman Sachs is thus lifting its previous Q2 and Q3 forecasts by $10 per barrel.

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on February 23 2021 said:
    A few months ago major investment banks, oil traders and analysts were competing with each other how low oil prices will be in 2021. Now they have become feverish in their projections lifting the projected oil prices higher by the day.

    However, it is a fact that since China exited the lockdown in May 2020 I have been projecting repeatedly in my comments to articles posted by the oilprice.com that Brent crude oil price will hit $40-$50 a barrel in the last quarter of 2020. Brent ended the year at $51.

    I also projected that Brent will rise to $60 in the first quarter of 2012. The price rose to $66 today. Equally I also projected that Brent will rise further to $70-$80 in the third quarter and average $65 in 2021 with global oil demand returning to pre-pandemic level of 101 million barrels a day (mbd) by the middle of this year.

    I am now projecting that we will see $100 oil by the second half of 2022 or the first quarter of 2023 because of a projected demand-supply deficit estimated at 10-15 mbd by then

    My projections were always based on seeing the wider picture in the global oil market and reading the trends in the market carefully before I venture to give a projection.

    That is why my projections have so far proven right.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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