London — Standard Chartered has raised its 2021 Brent forecast $6 per barrel to $71 per barrel and its 2022 Brent forecast $8 per barrel to $67 per barrel, the company revealed in a new report sent to Rigzone following the outcome of the latest OPEC+ meeting.
“We think the market has concluded that OPEC+ does not see $80 per barrel as a ceiling and that it is unlikely to cool prices in the short term,” Standard Chartered analysts stated in the report.
“Ministers have not challenged a market narrative that assumes tight balances and an associated lack of spare capacity; as a result, prices are likely to remain elevated for longer,” the analysts added.
“The implication that OPEC+ is not yet overly concerned about negative demand effects also suggests to us that it will defend a higher price floor than we previously thought,” the Standard Chartered representatives went on to say.
In the report, the analysts noted that they see markets as, at best, balanced over the next six months, even with a high estimate of 700,000 barrels per day of substitution from gas to oil and with no OPEC+ increases after December.
“Our view is broadly in line with that of the Energy Information Administration (EIA) and is more bullish that that of the OPEC Secretariat, particularly for Q1,” they said.
“Our own and other models imply that extreme tightness is a market fear rather than a base case; however, OPEC+ has yet to address that fear,” the analysts added.
Standard Chartered analysts highlighted that the OPEC+ meeting of October 4 proved to be uncomplicated, with “a very short meeting, a brief press release with no discussion of either prices or the spill-over from overheating gas markets … and no press conference”. The analysts outlined that the 400,000 barrel per day increase decided by the group was not surprising, adding that they expect another when OPEC+ meets next on November 4, but said they found the lack of either explicit signalling on prices or comment on future fundamentals more surprising.
Earlier this week, Fitch Solutions Country Risk & Industry Research released its latest oil price forecasts to 2025. These projected that Brent crude prices will average $70 per barrel in 2021, $67 per barrel in 2022, $68 per barrel in 2023, $70 per barrel in 2024 and $73 per barrel in 2025. The Bloomberg Consensus, which was also highlighted in Fitch Solutions’ latest projections report and which Fitch Solutions is a contributor to, forecasts that Brent crude prices will average $69 per barrel this year, $66.5 per barrel next year, $66 per barrel in 2023, $70 per barrel in 2024 and $65.7 per barrel in 2025.
Last month, the United States Energy Information Administration (EIA) kept its average Brent spot price forecasts flat month on month, with the organization expecting Brent spot average prices to hit $68.61 in 2021 and $66.04 in 2022. The EIA’s next oil price outlook is scheduled to be released on October 13.
At the time of writing, the price of Brent crude oil stood at $80.04 per barrel. Compared to this time last year, the price of the commodity has almost doubled.
*Andreas Exarheas, [email protected]
