Strategists at DBS Bank raise their oil price forecasts for next few quarters as the winter months could see higher oil demand owing to the switch from gas for heating purposes.
Oil markets looking well beyond China concerns
“Considering the higher gas prices and potential oil demand boost of 0.5- 1.0mmbpd in the near-term from fuel switching requirements, we revise up our oil price forecasts for the next few quarters. Thus, our 2021 average Brent crude oil price forecast now stands at $67-72/bbl (vs. $65- 70/bbl earlier) and our 2022 Brent crude oil average price forecast is raised to $70-75/bbl (vs. $67-72/bbl earlier).”
“China oil imports will likely be weaker than expected in 2H21, owing to the Delta variant outbreak-related lockdowns and Evergrande contagion, but the oil market remains well supported by demand from other parts of the world, with global oil inventories well below five-year average levels and persistently falling month-on-month.”
“Supply side poses limited concerns as internal disagreements within OPEC have been sorted out, and hurricane-linked supply outages from the US Gulf of Mexico provides further support in the near-term.”