Even if the geopolitical situation is the most favorable for the global oil market, oil prices are still never going to exceed the $75/b threshold again, Bank of America Merrill Lynch (BofA) experts believe.
In his oil market review, BofA analyst Francisco Blanch reports that the Brent oil price has already gained 41% over the last 12 months. This happened as the result of a stronger global economy and more expensive oil products like gasoline. As for breaking above the $60/b threshold, this was a response the OPEC’s efforts to cap oil production amid higher demand for crude oil around the globe fueled by global economic growth.
Mr. Blanch is convinced that up until 2020, Brent oil is going to see its price go up and down within the scope of the $60-65/b range. Maybe it will touch $75/b but won’t exceed it. All in all, BofA analysts expect the average price of Brent oil to be around $54/b later this financial year and $65/b in Q4 2018 ($49/b and $52/b, peaking at $65, for WTI oil respectively).
On November 7th, 2 investment banks at a time improved their oil forecasts. In particular, ING raised the Q4 2018 forecast from $52/b all the way up to $57/b. On top of that, they are convinced that the OPEC is going to extend the OPEC+ deal until the end of 2018. NordFX experts raised the Q4 2018 forecast from $55/b all the way up to $62/b.
Hedge funds were among those reacting to possible changes and going bullish on Brent oil. In particular, the amount of long contracts opened on the last week of October on ICE Futures Europe increased by 23500 units all the way up to 530K contracts.
