Brent likely to average $50 per barrel in 2021, BofA says – The National

Brent likely to average $50 per barrel in 2021, BofA says – The National

Brent crude could average $50 per barrel in 2021 on the back of a faster-than-expected demand recovery in sectors such as transportation as well as strong supply cuts from Opec, according to the Bank of America. The lender revised its estimate for the world's most widely-traded crude benchmark upwards by $7.

Brent is expected to average $43.70 per barrel this year, an increase on its earlier estimate of $37 per barrel as many countries lift movement restrictions that were put in place to limit the spread of the coronavirus pandemic.

"Global oil market fundamentals have shifted significantly since we last adjusted our oil price forecasts on March 8, the bank said in a note on Sunday.

"As we head into next year, mobility demand could recover at a faster rate than we initially anticipated. Also, Opec+ will likely hold back larger supply volumes than we pencilled in three months ago,“ the lender added. The alliance, led by Saudi Arabia and Russia, is cutting back 9.7 million barrels per day until July, with tapered cuts in place until 2022.

A tighter scenario for oil supply and demand also means an improved outlook for West Texas Intermediate, the key US gauge. BofA revised its forecast for