Brent Oil to ease back towards $70 by end-2021 after peaking at $80 – CE

Strategists at Capital Economics now expect the price of Brent (WTI) to peak in Q3 at around $80 ($77) per barrel, before easing back in Q4 and throughout 2022 as supply rebounds.

Key quotes

“oil supply will remain constrained for some time yet. The rollover of current OPEC+ production cuts and the fact that demand is still subdued means that compliance with quotas, particularly in OPEC countries, is likely to remain high for at least the next few months.

“There will be a release of ‘pent-up’ demand as quarantine measures are lifted, starting in Q2. And even if international travel restrictions remain in place, we would still expect demand to pick up, as many people would take additional domestic trips instead.” 

“Extensive policy support provided by governments and central banks will provide a further boost to the value of risky assets, such as oil.”

“We expect the global oil market to be in a slightly bigger deficit in the first half of the year than we had expected, which will provide a further boost to prices. Nevertheless, we still think that the price of Brent (WTI) will fall to $70 ($67) per barrel by end-2021 and $60 ($57) by end-2022, respectively, as the boost from pent-up demand fades and supply revives.”