Lagos — The United States Energy Information Administration, EIA, has forecast oil prices at $70 per barrels this year.
“For 2022 as a whole, we expect that growth in production from OPEC Plus, of U.S. tight oil, and from other non-OPEC countries will outpace slowing growth in global oil consumption, especially in light of renewed concerns about COVID-19 variants,” the EIA said in a recently issued short-term energy outlook.
“In reality, crude oil futures prices have witnessed substantial correction since early November due to the decision to release crude oil stocks in a few major oil consuming countries and warmer-than-expected winter in the Northern Hemisphere so far.
Brent crude oil futures prices will average 70 U.S. dollars per barrel in 2022,” the agency stated in the outlook.
But, in a bullish report from JP Morgan, analysts are predicting $125 oil this year and $150 oil in 2023.
The forecast, according to the report, is driven by the belief that OPEC has a limited capacity to increase oil production.
“Crude oil could soar to $125 per barrel next year and $150 in 2023 due to OPEC’s limited capacity to boost production,” JP Morgan analysts said in a new report.
“OPEC+ is not immune to the impacts of underinvestment…. We estimate ‘true’ OPEC spare capacity in 2022 will be about 2 million barrels per day (43%) below consensus estimates of 4.8 million,” the team, led by Christyan Malek, wrote.
“While we believe a three-month pause to 400,000 barrel-per-day monthly increments is needed during the first half of 2022 to balance the market (and potentially a cut pending impact of new COVID variants), the group will struggle to deliver monthly growth of more than 250,000 barrels per day once reinstated,” the analysts also said.
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