Oil is the last bastion of the commodity scoundrel. A completely manipulated market upon which just about any fantasy can be projected. Take BofA for instance:
Brent prices should average $68/bbl in 2021 but…
Back in June of last year, we argued that crude oil prices would be on an upward path into 2021 as OPEC+ cuts and an incipient demand recovery would push Brent to $60/bbl by 2Q21. The reported effectiveness of Covid-19 vaccines, coupled with further OPEC+ supply curbs, encouraged us to move our 2Q21Brent target to $70/bbl in February. This narrative has largely played out, with limited progress on Iran briefly pushing prices above $75/bbl this month. What comes next? Petroleum inventories are now below a 5y mean in OECD countriesand should support Brent at $68/bbl on average in 2021, but ample OPEC+spare capacity and a likely return of Iran barrels will likely cap oil prices this year.
