Revising up our end-year oil price forecast

The price of Brent crude oil breached the $60 per barrel mark this week for the first time in over a year, in a continuation of its strong performance since COVID-19 vaccines were announced in November. Given our upbeat oil demand outlook for H2 2021, we expect that the recovery in oil prices has further to run, and have just revised up our end-year forecast to $70. That said, we expect that price gains will be relatively short-lived as supply is likely to come back with a bang in 2022. (See our Energy Update.) Next week is likely to be a relatively quiet period for commodities prices as the Chinese New Year holiday continues. The minutes from the Fed’s January meeting, scheduled to be released on Wednesday, are likely to underline that those officials already talking about tightening policy are firmly in the minority on the FOMC, which could weigh on the US dollar and give a boost to commodity prices.