Brent crude will average $59.07 per barrel this year, according to a Reuters survey of analysts.
This is up from last month’s consensus on an average of $54.47 a barrel, reflecting growing optimism about the immediate future of the world’s most traded commodity.
“Travel and leisure activity look set to catch up to buoyant manufacturing activity due to the mix of stimulus, confidence, vaccines, and more targeted pandemic measures,” one of the survey respondents, Norbert Ruecker from Swiss Julius Baer, told Reuters.
The combination of accelerating vaccination drives, government stimulus, and continued supply discipline, notably among OPEC+ members and U.S. shale producers, has lifted oil prices recently, with a number of banks revising their oil price forecast upwards.
Bank of America, for instance, recently said it expected oil prices to grow at the fastest rate in three decades. The bank forecast Brent will average between $50 and $70 over the next five years.
Barclays expects the global benchmark to trade at an average of $67 a barrel this year, citing normalizing inventories in the United States and a weaker response of the U.S. shale patch to rising oil prices.
“Colder-than-normal weather, especially in the southern states, has accelerated the normalization in inventories by disrupting output more than demand,” Barclays said.
Goldman Sachs went even higher earlier this month, predicting Brent could hit $75 a barrel by the third quarter of this year thanks to faster than previously expected oil market rebalancing.
“Faster re-balancing during what was expected to be the dark days of winter will be followed by a widening deficit this spring as the ramp-up in OPEC+ production lags our above-consensus demand recovery forecast,” Goldman analysts said.
Talk has even started about the possibility of oil returning into three-digit territory after the Texas Freeze, again thanks to a rebalancing market and government stimulus aimed at restarting pandemic-hit economies.
By Irina Slav for Oilprice.com
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We are currently in a bull market with all the bullish factors that matter working in synchrony and pushing oil prices higher. That is why I have been projecting that Brent crude is going to hit $70-$80 in the third quarter of 2021 with a $100 oil in sight by the second half of 2022 or the first quarter of 2023.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London