With West Texas Intermediate (WTI) crude piercing the $90/bbl mark, chatter of $100+ oil has picked up further steam. Is peak oil supply on the horizon? According to strategists at the Bank of Montreal, it is probably too early to declare peak oil supply has arrived.

Outlook for demand looks pretty clear

“It’s the growing risk that global oil supply could increasingly lag the recovery in demand that is underpinning the surge. This has prompted us to revise up our WTI forecast to $85/bbl in 2022 and $80 in 2023 (previously $75 and $77.50, respectively).”

“Outlook for demand looks pretty clear. Global oil demand is likely to grind higher in line with the International Energy Agency’s (IEA) projection of 100.6 mb/d in 2022. From a medium-term perspective, we would expect global oil demand to increase roughly 0.75 mb/d on an annual basis as the pandemic moves to the rearview mirror.”

“The new, big unknown is whether recent under-production among  OPEC+ members is due to years of underinvestment and maturing oil fields or more a result of temporary technical and operational issues as the IEA recently characterized.”