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- Oil: Looser fundamental conditions make sky-high prices unsustainable next year – TDS
Oil: Looser fundamental conditions make sky-high prices unsustainable next year – TDS
Following a very strong year, the energy complex is set to disappoint many investors who believe that the crude oil bull market would run uninterrupted for the next twelve months. TD Securities projects that crude oil will moderate from cyclical highs as the coming year unfolds.
Supply rebound, demand normalization conspiring to force oil off highs
“Brent may still challenge $90/bbl over the next six months or so. After that, a convincing move below $80/bbl is very much in the cards in the latter part of the year.”
“The declining rate of demand growth for crude, which is expected to drop from 5.5 million bbls/d in 2021 to around 3 million bbls/d next year and just to above 1 million bbls/d in 2023, will be a key reason for the decline. But non-OPEC supply, which is projected to grow by as much as 3 million bbls/d, is another additional very important factor pulling prices lower, as is the fact that OPEC+ has some 5-6 million bbl/d of excess capacity to deploy to a looser market.”
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