Brent crude has gained 23% to around $64 a barrel this year. Its gains have already surpassed the most bullish of forecasts, says Avi Salzman for Barron’s. Bank of America thinks crude will hit $100 a barrel “from time to time” over the next five years. Before 2014 crude regularly traded above $100. That era ended when US shale drillers began to pour millions of new barrels onto global markets.
There are two key factors currently capping oil below $100 a barrel. First, energy cartel Opec and ally Russia are currently withholding about seven million barrels per day (mbpd) of production to prop up prices; economic recovery this year will cause them to turn on the taps and flood the market. Second, the green-energy transition means that some analysts think the world may already have passed peak oil demand. The energy transition is “real” and welcome, but things are moving “glacially”, says Dylan Grice on themarket.ch. Bloomberg projects that electric vehicles “will only make up around 8% of the total fleet of passenger cars by 2030... The oil market will continue to play a central role” for decades.
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