Standard Chartered has raised its 2021 Brent forecast $6 per barrel to $71 per barrel and its 2022 Brent forecast $8 per barrel to $67 per barrel, the company revealed in a new report following the outcome of the latest OPEC+ meeting.
“We think the market has concluded that OPEC+ does not see $80 per barrel as a ceiling and that it is unlikely to cool prices in the short term,” Standard Chartered analysts stated in the report.
“Ministers have not challenged a market narrative that assumes tight balances and an associated lack of spare capacity; as a result, prices are likely to remain elevated for longer,” the analysts added.
“The implication that OPEC+ is not yet overly concerned about negative demand effects also suggests to us that it will defend a higher price floor than we previously thought,” the Standard Chartered representatives went on to say.
In the report, the analysts noted that they see markets as, at best, balanced over the next six months, even with a high estimate of 700,000 barrels per day of substitution from gas to oil and with no OPEC+ increases after December.
“Our view is broadly in line with that of the Energy Information Administration (EIA) and is more bullish that that of the OPEC Secretariat, particularly for Q1,” they said.
“Our own and other models imply that extreme tightness is a market fear rather than a base case; however, OPEC+ has yet to address that fear,” the analysts added.