Strategists at Capital Economics expect oil prices to rise a little further over the next couple of quarters. A rebound in demand at a time when supply is set to remain relatively constrained should widen the deficit in the global oil market and push the price of Brent up to $75 per barrel by Q3 2021. However, they think prices will then begin to drop back as increasing supply shifts the market into a surplus.
See: Brent Oil to move back to a $60-$65 range on a full Indian lockdown – OCBC
Global oil demand will continue to recover strongly over 2021
“As vaccines are rolled out and restrictions are lifted, we anticipate a surge in oil consumption. In particular, we think pen-tup demand for travel will mean that oil consumption will exceed pre-pandemic levels in Q3 this year, which underpins our forecast that the price of Brent Oil will peak at this time at around $75 per barrel.”
“The strong increase in oil demand this year will keep the market in a deficit. But rising prices will inevitably incentivise higher supply. We expect OPEC+ to gradually bring capacity back on stream and US production to tick up so that by 2022 the oil market will return to a surplus and prices will be falling.”
“Our end-year forecasts for Brent are $70, $60 and $55 per barrel for 2021, 2022 and 2023 respectively.”
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