Oil Price Forecast Update by UBS - Sept 21

[dan_s]

UBS Raises Brent Oil Price Forecast for 2021 and 2022 but Remains Cautious on Long-Term Outlook

"We have raised our FY21E forecast for Brent to $67.50/bbl from $65.80/bbl.
This recognises the trading range the market has identified in the recent
recovery period albeit it also continues to factor in some caution around the
2021/22 northern hemisphere winter," the investment bank noted. "It also leads
us on to raise FY22E to $68.50/bbl from $62.00/bbl previously. We have left
2023-25E unchanged at the bottom of the $60-$80/bbl incentive range we have
previously identified. Our view is consistent with an underlying slowing of
demand growth once the post-pandemic recovery has been achieved and the full
availability of Iranian production capacity in time. The effects on oil prices
in the medium term of energy transition are complex and we intend to revisit
this topic in due course."

MY TAKE is that if we ever do get to a real Post Pandemic World, demand for oil will spike by several million barrels per day quickly. Demand is already back to the 2019 level, even with demand for jet fuel still down. UBS is part of the Wall Street Gang that uses a conservative oil price deck to value upstream oil and gas companies. Their Brent forecast of $68.50 for 2022 equates to a WTI forecast of $66.50/bbl, which compares to my 2022 forecast of 70/bbl.