There were big moves in oil prices in 2021 as economic reopening and geopolitical pressures played out. Oversupply points to lower oil prices in 2022, with West Texas Intermediate (WTI) potentially trading below the $60 level, strategists at Deutsche Bank report.

Likely continued strong demand for oil

“We forecast WTI falling and potentially breaking $60/barrel next year on the back of a material rise in oil surpluses.”

“In supply, OPEC is set to add at least 2.1 mmb/d, slightly more than non-OPEC supply addition of +1.9 mmb/d dominated by the US (+900 kb/d) and the Former Soviet Union (+400 kb/d), all in Q4-22 over Q4-21 terms.”

“On the demand side, we forecast healthy growth (+3.4 mmb/d YoY) with oil demand back to pre-Covid 2019 levels by the end of next year, but we see downside risks, especially to jet fuel demand, on the back of new variant risks.”

“With OPEC adhering to its scheduled January supply increase, the risks to the $60/bbl WTI and $64/bbl Brent forecasts (Q2 to Q4-22) are skewed to the downside.”