Oil could top $100 per barrel if winter is colder than expected, that’s according to a note from Bank of America to its clients.
Bank of America Global Research said it could bring forward its $100 per barrel oil price target to the next six months from mid-2022 if the winter is colder than usual, potentially driving a surge in demand and widening a supply deficit.
“We continue to project that oil prices will remain range-bound in the second half of 2021 and maintain our average Brent crude oil forecast of $70 for this period, although we now target Brent to be at $75 by year-end, as we see growing upside risks,” writes Francisco Blanch, commodity strategist at Bank of America Europe.
“However, the weather is quickly becoming the most important driver of energy markets. If the winter turns out to be much colder than normal, global oil demand could surge by 1 million to 2 million barrels per day.
“Under this scenario, the oil market deficit this winter could easily exceed 2 million barrels per day, and our $100 oil target for the middle of next year could quickly be rolled forward six months.”