(Reuters) – Bank of America (BofA) Global Research raised its forecast for Brent crude oil prices for this year announcing tighter supply due to Texas freezes and OPEC + yield loops and unprecedented global monetary stimulus, said it in a note dated Monday.
The bank now expects Brent crude oil to average $ 60 per barrel in 2021, up from a previous estimate of $ 50. BofA also predicts West Texas Intermediate (WTI) crude prices on average $ 57 per barrel this year.
Brent prices could temporarily spike to $ 70 a barrel in the second quarter of the year, bank analysts said in a note.
Brent crude rose 0.4% at $ 65.51 a barrel by 1313 GMT, while U.S. crude rose 0.5% to $ 62.00 a barrel.
Oil prices rose Tuesday, aided by a slowdown in global COVID-19 locks, positive economic forecasts and lower output as U.S. supply slowly returned after the deep freeze in Texas exclusion of raw produce.
“The severe freeze in Texas last week should reduce global investments by an additional 50 million barrels, supporting additional (oil) prices,” BofA said.
The bank also said Saudi Arabia’s additional voluntary oil production cuts in February and March and the Organization of Petroleum Exporting Countries and Allies (OPEC +) also maintained supportive production.
An OPEC + supply contract that expands into the first quarter has removed an additional 180 million barrels from the market, creating more additional capacity, they said.
However, BofA noted that the lowest short – term risk in oil prices could come from a new contract in Iran, which could bring 2 million bpd into the market in a short order.
Reporting by Nakul Iyer in Bengaluru; edited by David Evans