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Brent broke back above $80…
Brent Crude prices are set to average $80 a barrel in 2022, Barclays said on Tuesday, raising its forecast by $3 as it expects slower supply growth next year and faster inventory drawdown by the end of this year.
In a note on Tuesday carried by Reuters, Barclays also revised up its projection for average WTI Crude prices in 2022, also by $3 to $77 per barrel, as it doesn’t expect OPEC+ to rush to restore all production as planned if the market becomes oversupplied early next year.
Oversupply at the start of 2022 seems to be the general forecast of nearly all analysts and observers, including OPEC+ itself, which has been cautioning for months against adding more production than planned.
Barclays now sees the surplus coming as early as the first quarter of 2022, compared to a previous forecast of surplus in Q2 2022, but notes that the inventory drawdowns this year are likely to drain commercial stockpiles more than previously forecast, which would leave a lower starting point for inventory builds.
In view of the expected surplus, OPEC+ could slow or even pause the monthly additions of 400,000 barrels per day (bpd), if the current COVID resurgence weighs significantly on global oil demand, according to Barclays.
The planned, coordinated release of SPR from the United States and major Asian consumers, including India and Japan, would not materially move oil prices, the UK bank said.
“We think Strategic Petroleum Reserves are not a sustainable source of supply and the effect of such market intervention would only be temporary,” Barclays’s analysts wrote in the note carried by Reuters.
Last week, Goldman Sachs said that the market had already priced in a concerted release of crude oil from national reserves, adding that the U.S. was expected to release between 20 and 30 million barrels, with the rest of the group likely releasing a combined 30 million barrels.
Earlier this week, Goldman Sachs said that the recent oil price decline was not justified by fundamentals, keeping its estimate of Brent averaging $85 per barrel in Q4.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.