Bank of America expects oil to reach $100 a barrel

Bank of America expects oil prices to reach $100 per barrel within the next six months if the world faces a cold winter.The bank said in a research note, today, Monday, that increased production from Saudi Arabia and other members of OPEC + has offset the improvement in demand.

“Despite oil price movements, OPEC+ is once again working to stabilize oil prices as it has historically,” US bank analysts said.

The bank noted that with natural gas prices rising by 3.18%, as well as other energy prices, cold weather may lead to a switch to oil, leading to higher crude oil prices.”In Asia there is an estimated 1.5 million barrels per day of unused fuel oil power generation capacity, and Europe is home to nearly 300,000 barrels per day of fuel oil power generation capacity,” the report continued.

Analysts said the US also had a “reasonable amount” of capacity to switch to oil power generation.optimistic forecast
These forecasts are in line with Goldman Sachs’ expectations that crude oil will lead commodity prices higher in the next quarter.

Oil prices rose above $73 a barrel on Monday, after a series of weekly gains, as investors tracked the recovery of slow supplies in the Gulf of Mexico, demand expectations and inventories during the fourth quarter.

US West Texas Intermediate crude was trading above $70 a barrel, up 0.7% after rising 2.3% on Friday.

In more than two weeks since Hurricane Ida hit the main production area, nearly half of crude oil production in the US Gulf of Mexico has not restarted, according to the latest toll from the Bureau of Safety and Environmental Enforcement.

bullish shock
The disruption from the storm was an “extraordinarily bullish shock to the market”, according to Goldman Sachs, and IDA was unique in its upward impact on US and global oil reserves, resulting in an estimated decline of 30 million barrels.

Oil has risen in recent weeks, paring a quarterly decline, as investors assessed the fallout from the hurricane and the recovery in demand from the coronavirus pandemic.

The move to the top came at a time when the Organization of the Petroleum Exporting Countries (OPEC) and its allies are committed to a plan to restore production, and China has confirmed an unprecedented supply of crude from its stocks.

The effects of IDA have halted about 1.1 million barrels of daily production in the Gulf of Mexico, and it is unclear when that production will return, which is a bullish sign, according to Vitol Group, the world’s largest independent trader.

Later on Monday, OPEC was set to release its latest monthly assessment of supply and demand around the world as inventories continued to dwindle.

US crude oil inventories fell to their lowest level since September 2019.