Bank of America foresees $90 oil price in half-year

The Bank of America is seeing the global price of oil heading back above $80 in the second half of the year and rising toward $90 due to a supply deficit.

While the bank’s forecast for the second half of the year was bullish, it believes the second quarter will average the mid-$70s.

The main drivers behind the bank’s prediction are rising demand, the OPEC+ cuts, and a lack of response from US shale.

The report obtained by Daily Trust on global oil prices indicates oil prices will return to above $80 per barrel in the second half of this year and could continue rising toward $90 due to a deepening supply deficit, Francisco Blanch, head of the search at Bank of America, told Bloomberg Television at the weekend.

“We’ll get back up over $80 in the second half of the year, toward $90, because the deficit is going to get deeper throughout the next six to nine months,” Blanch added.

The supply deficit will widen due to the OPEC+ cuts and the lack of response from US shale, as seen in previous cycles, Blanch noted.

Analysts in the latest monthly Reuters survey also see prices rising toward $90 per barrel by the end of this year, driven by Chinese demand and a tightening market following OPEC+’s latest production cuts.

So far this year, Brent prices have averaged around $82 per barrel.