The price of oil could hit $100 per barrel over the next six months If winter temperatures in the northern hemisphere turn out to be below seasonal norms.
Oil demand would spike and could lead to oil shooting up to the $100 mark, Bank of America Global Research said.
BofA Global Research said in June that expectations of a strong demand recovery that outpaces supply in the coming months could lead to oil prices briefly hitting $100 per barrel in 2022.
“We believe that the robust global oil demand recovery will outpace supply growth over the next 18 months, further draining inventories and setting the stage for higher oil prices,” analysts at BofA wrote in June, in which they significantly raised their price forecasts for next year’s average Brent Crude prices.
Nearly three months later, BofA still sees the upside for oil prices amid modest market deficits in the next few months. It also sees potential for oil to hit $100 a barrel earlier than its mid-2022 call in June if the winter is colder than normal.
In the latest note, Bank of America analysts wrote:
“Downside risks include a new COVID-19 wave, taper tantrum, a China debt crisis, and the return of Iranian crude barrels. Having said all of that, winter weather risk is quickly becoming the most important driver of energy markets.”