Like cats, you could say that oil also has ‘seven lives’. The end of this raw material has been predicted on several occasions and for different reasons (sometimes because it is running out and others because it was going to stop being used). The energy transition that developed countries are implementing seemed like it was going to be the final blow to ‘black gold’ as we know it today. Whether or not it is the final ‘lunge’, the truth is that oil is trading above $ 70 today and it is believed that extreme weather could take a barrel to exceed $ 100, levels not seen since mid-2014.
Oil has received a strong ‘boost’ in the session this Monday. On the one hand, the Organization of the Petroleum Exporting Countries (OPEC) world thirst for oil will exceed pre-pandemic levels next year, with improved vaccination rates and increased public confidence in the management of the covid-19 by governments, which will stimulate the recovery of mobility , both domestic and international.
In its monthly report, OPEC has raised its forecast for world oil demand for 2022 by nearly one million barrels per day (bpd) to 100.8 bpd, the highest level of demand since 2019 when it was 100, 3 million barrels. In this way, OPEC believes that demand will recover six months earlier than expected, which may be an extra boost for the price of oil.
In addition to the OPEC forecasts, this Monday a Bank of America Merryl Lynch report was also published that triggers its forecast for the price of oil under the condition that this winter is very cold, something that cannot be ruled out according to experts .
To the possibility of the cold we must add the surprising slowness of the supply (oil producers) when it comes to meeting the growing demand for crude that is coming from the hand of the economic recovery. Oil-producing companies are delaying their investment decisions in the face of a somewhat uncertain future in which developed governments plan to ‘get their hands on’ polluting energies to favor renewables. These frictions in the midst of the energy transition can generate strong spikes in energy prices, as you are already seeing today.
$ 100 a barrel?
The report of the American bank maintains that under its base scenario (the most probable), the price of Brent crude oil will remain between 70 and 75 dollars until the end of the year, but acknowledges seeing “growing risks to the upside.”
“In line with this vision, we project deficits in the coming months that should support oil prices until the end of the year. However, a new wave of covid-19, a tantrum in the markets, a debt crisis in China or the return of the barrels of Iranian crude could cause that the oil falls “, explain these experts.
“However, the weather is fast becoming the most important driver of energy markets. If the winter turns out to be much colder than normal, global oil demand could rise an additional 1 to 2 million barrels per day. Under this scenario, the oil market deficit this winter could easily exceed 2 million barrels per day and reach our goal of $ 100 a barrel, “say US bank analysts.
Oil futures celebrate the support of OPEC and BofAML with rises that touch 2% for Brent, the benchmark in Europe, and Texas, the benchmark in the US. European crude is close to $ 74 per barrel, the highest since the beginning of August. For its part, American oil does the same, recapturing $ 70 per unit.
