Banks stand firm on calls for oil ‘supercycle’ even as price drops

Banks stand firm on calls for oil ‘supercycle’ even as price drops

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Banks calling for an oil "supercycle“ have said the 14 per cent tumble in the price of crude in recent weeks marks a pause rather than the end of what they see as a sustained move higher.

International benchmark Brent crude has fallen from a 14-month high above $71 a barrel on March 8to a low of $61.41 on Tuesday. Prices had rallied 84 per cent from November to the recent peak.

Traders were betting that demand would rebound sharply as Covid-19 vaccines rolled out around the world, but delays to inoculations and stricter lockdowns in Europe have hit short-term oil consumption, while growing inflation concerns unsettled wider financial markets. New hedge fund bets on rising oil prices have slowed sharply in recent weeks, according to exchange and regulatory data.

But banks including JPMorgan, Goldman Sachs and Barclays have in recent days either reiterated their long-term bull case for oil or even increased their forecasts for prices.

Analysts at Barclays said on Tuesday that they were raising their Brent forecast to an average of $66 a barrel in 2021 and $71 a barrel in 2022, arguing they still see demand rebounding in the second half