RBC Capital Markets Boosts Oil Price Forecasts
RBC Capital Markets on Thursday raised its forecast for the price of West Texas Intermediate crude oil in 2022 to US$72.50 per barrel and to US$75.00 for Brent crude, a hike of 12% and 13% respectively, as it looks for a balanced market.
"Our three-step blueprint for sustainably higher oil prices involves: 1) return OECD inventories toward seasonally normal levels (which has been accomplished); 2) the tapering of OPEC spare capacity (in process); and 3) the call on US shale production increases (an event that is likely to play out next year). The common theme between these three steps centers on removing both storage and supply shock absorbers from the market, leading to a structurally tight, fundamentally driven oil backdrop," the investment bank said in a note. "Market balances only begins to reach a state of equilibrium if US production grows by 1.2 mb/d in 2022. Any shortfall, and balances will remain tight. Next year is when US shale will be counted on as moving from market antagonist to market necessity and more shale will be required to keep markets balanced."