Bank of America latest to forecast $100/b oil on tighter fundamentals

London (Quantum Commodity Intelligence) - The Brent crude oil price could reach $100/b next year, as fundamentals tighten on the return of travel demand and production increases lag behind on falling investment, Bank of America said in a report Monday.

However, that peak might only be brief and the average for 2022 was forecasted at $75/b, said the bank, whose forecasts are at the lower end of the range.

A subsequent ramp-up for US shale oil supply attracted by higher prices could then lead to lower prices in 2023, the report added, at an average of $65/bbl.

The bank also raised its 2021 forecast to $68/b from a prior $63/b.

The number of market watchers predicting a return to $100/bbl oil prices by next year has been picking up pace, with trading house Trafigura and investment bankers Goldman Sachs also making the call recently.

Others have pointed to closer $80/b this year as more realistic, but the consensus has been that improving economic activity and a lack of upstream investment in fossil fuels will likely lead to tighter fundamentals.

Bank of America said that investment in new production was being crimped by environmental concerns, with oil company shareholders calling for a switch in capital expenditures to renewable energy and for cash to be returned instead of being used to increase shale drilling.