Oil Price Forecast - Dec 29

[dan_s]

The renewed vigor in oil prices of late is only just the beginning, contends veteran industry analyst Phillip Streible of Blue Line Futures.

"We are going to see the demand picture continue to pick up going into the [summer] driving season. Hopefully we can get this pandemic behind us. You'll see all that pent-up travel demand really take back off again. Flights were pretty full over the holiday weekend, but we expect them to get even fuller as the capacity picks up. If you look at the supply side on crude oil, we have 432 million barrels. The five-year average is 460 million, so supplies are quite tight. We don't expect OPEC to take any kind of reaction by picking up their supply picture. So we expect any kind of small supply shock would send prices higher. We are expecting $85 to $90 [a barrel] oil next year," said Streible on Yahoo Finance Live."
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The FEB22 NYMEX futures contract for WTI is trading at $75.73/bbl this morning.

MY TAKE: The FEAR of Omicron (or the fear of shutdowns due to Omicron) seems to be the only thing keeping a lid on oil prices today. U.S. and OECD petroleum inventories (crude oil and refined products) are ~27 Days of Consumptions, which historically would already have oil at $90/bbl. Consumption will go up in the spring (oil demand is seasonal) and OPEC+ is on a path to be totally out of spare supply capacity within 6-8 months. I am sticking with my oil price forecast of $80/bbl WTI average for the year 2022, but IMO the risk of a spike to $100/bbl is very real. WTI averaged ~$77/bbl in Q4 2021.