Major banks JPMorgan Goldman Sachs are forecasting a new "super cycle" in the oil market, expecting oil prices to rise as the pandemic subsides, the Financial Times writes.
According to their forecasts, Brent will return to the $ 100 / bbl region. for the first time since 2014. The bullish forecasts are based on the expectation that fiscal stimulus will boost oil demand, in the absence of new production projects due to sharp cuts in capex by oil companies in recent years. This imbalance between supply and demand contributes to long-term price growth and creates preconditions for the formation of a "super cycle" in the market. Experts are waiting for a complete transformation of the oil market.
April Brent oil futures traded at $ 63.27 a barrel on Tuesday. Over the past three months, their value has increased by 42%.
Geoffrey Curry, a commodities analyst at Goldman Sachs, who predicted the previous supercycle in the commodities market in 2003-2004, told the FT that he sees a real risk of oil prices rising to $ 80 / bbl. or even higher this year.
His forecast is not based on an increase in demand from China, but on the expected growth in global consumption thanks to government programs to support the economy, including a $ 1.9 trillion stimulus package proposed by US President Joe Biden.
But there are other opinions as well. Arjun Murthy (one of the famous oil analysts), who previously worked with Curry at Goldman Sachs, believes that it is premature to talk about a "super cycle" in the oil market, but one can imagine scenarios in which oil prices will rise significantly.
Before the pandemic, global oil demand stood at about 100 million bpd, and fell to about 90 million bpd last year, and analysts do not expect it to recover to pre-crisis levels before 2022, when air traffic is expected to recover.
According to Murti, if the growth rate of oil demand in the coming years will be about 500 thousand bpd, this will not be enough to create a deficit in the market. However, an increase in demand by 1.2-1.4 million bpd, which was noted after the fall of the oil market in 2014-2015, could provoke a "super cycle". The increase in oil production is the main factor limiting the bullish outlook.
In the short term, we should not expect an oil shortage, given that a number of countries, such as the UAE, are planning to increase production capacity, "said Patrick Gibson, in charge of the oil sector at Wood Mackenzie.
Another veteran of the industry, Pierre Andurand, who made a name for himself during the last "super cycle" in the oil market by placing big bets on rising prices, is more cautious this time.
The direction of the oil market is largely in the hands of OPEC and will depend on how much oil the countries are willing to return to the market. I am sure that in 2021 and in subsequent years, oil prices will go up, but I see many factors that can cancel this growth, - he said in an interview with FT.