Monthly Reuters poll showed yesterday that Brent prices are expected to average $106.82 a barrel in 2022, and that’s the highest average oil price forecast in the survey so far this year, as the US and allies scramble to dump Russian oil.
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 yesterday 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.
Analysts spoken to 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.
Yesterday, 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 observers 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,” Head of Commodity Strategy at Saxo Bank, Ole Hansen, said in an analysis yesterday.
“We still believe – and fear – that worries about demand destruction will be more than offset by supply constraints,” Hansen added.
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