LONDON, Nov 30 — Oil prices will stay elevated into next year as Opec+ keeps a tight leash on supply despite US-led strategic crude releases, a Reuters poll showed today, but a Covid-19 resurgence fuelled by the Omicron variant could loom large over the outlook.
A survey of 39 economists and analysts — kicked off before Omicron grabbed headlines — forecast Brent crude to average US$71.25 (RM301) a barrel in 2021, up from the US$70.89 consensus in October and the US$70.57 average this year. The 2022 Brent outlook was raised to US$75.33 from US$74.04.
This is the highest projection this year for the benchmark.
“We expect that Opec+ will remain cautious in adding barrels, but does not want oil prices to move past US$80 for any sustained period of time,” said John Paisie, president of Stratas Advisors.
“Opec+ is also still worried about shale producers in the US ramping up production in response to higher prices.”
US crude was forecast to average US$68.52 and US$73.31 a barrel in 2021 and 2022 respectively, versus October’s US$68.62 and US$71.21 consensus.
Demand was seen growing by 4.5-6.0 million barrels per day (bpd) in 2021 and by 3.3-5.0 million bpd next year, led by Asia.
Oil prices have retreated from recent highs as concerns over Omicron coupled with the release of stockpiles by the United States and other nations posed headwinds.
The Organisation of the Petroleum Exporting Countries and allies, a group known as Opec+, will meet this week to assess the Omicron variant’s impact and decide whether to adjust its plan to increase output by 400,000 barrels per day in January and beyond.
A few analysts noted that while Opec+ could rein in a ramp-up in output in response to the stockpile releases, rising coronavirus cases and potential US shale growth could also impact prices next year.
Morgan Stanley yesterday cut its first quarter 2022 Brent crude price forecast to US$82.50 per barrel from US$95, stating that the Omicron variant creates a downside risk to its demand forecast. — Reuters
