Oil could jump above $100 for the first time since 2014 next year as demand soars, Bank of America says

Oil pump sunset background
  • Oil prices could briefly spike to $100 per barrel in 2022 as demand surges, Bank of America says.
  • On the demand front, pent-up desires to move out and about after an 18 month lockdown will push prices higher.
  • Brent crude hasn’t hit $100 since 2014. On Tuesday it jumped above $75 a barrel for the first time in two years.
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Oil prices could briefly spike to $100 per barrel in 2022 as demand surges, Bank of America says.

The firm’s Francisco Blanch said that three demand and three supply factors will push Brent to a “Benjamin” level. Brent crude hasn’t hit $100 since 2014.

On the demand front, people’s pent-up desire to move out and about after an 18 month lockdown will push prices higher, as well as a a continued use of private cars as commuters are slow to return to mass transit. He also said that more remote work could result in more miles driven, “as work-from-home turns into work-from-car.”

On the supply side, Blanch expects government policy pressure in the US and around the world to curb capital expenditures over the coming quarters to meeting goals outlined in the Paris Agreement and to limit CO2 emissions. Also, investors have become more vocal about ESG and that could curb supply.

“In short, demand is poised to bounce back and supply may not fully keep up, placing OPEC in control of the oil market in 2022,” Blanch said.

As a result, BofA increased its Brent crude oil price forecast for 2021 from $63 per barrel to $68 per barrel and upped its 2022 crude oil projections to $75 per barrel from $60 per barrel.

” Still, non-OPEC oil supply elasticity has not totally vanished. US shale will likely respond to these higher prices, suggesting that Brent will roll back down to average $65/bbl by 2023,” he added.

On Tuesday Brent crude jumped above $75 a barrel for the first time in two years. It now sits at $74.90.

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Dow rallies 308 points as traders digest blowout jobs report and rising yields

Trader
Traders work during the closing bell at the New York Stock Exchange (NYSE) on March 18, 2020 at Wall Street in New York City


US stocks rebounded after a sharp sell-off Thursday with the Dow gaining over 300 points following a blowout jobs report while yields rose.

Businesses added 379,000 payrolls in February, the Bureau of Labor Statistics announced Friday. Economists surveyed by Bloomberg expected a gain of 200,000 payrolls. The US unemployment rate fell to 6.2% from 6.3%, according to the government report. Economists expected the rate to drop to stay steady at 6.3%.

The 10-year Treasury yield extended its surge to top 1.61%. 

“The better-than-expected jobs report suggests a healthy economic rebound in progress and will likely add upward pressure on bond yields, as the bond market prices in a stronger economy, which may result in more consumer spending and eventually more inflation,” said James McDonald, Hercules Investments CEO and CIO.

“The biggest risk to the stock market is if the Federal Reserve loses control of bond yields, which have experienced a meteoric rise over the past month. Inflation will continue to exert upward pressure on yields going forward and into the summer months,” McDonald added.

On Thursday, Federal Reserve Chairman Jerome Powell gave little indication that the world’s most powerful central bank was willing to intervene in the recent government bond sell-off.

“I’d be concerned by disorderly conditions in markets, or by a persistent tightening in financial conditions,” he told the Wall Street Journal jobs summit. He said the Fed was keeping an eye on “a broad range of financial conditions,” not just one indicator. Investors took Powell’s words to mean that the Fed was fine with yields rising further. 

Here’s where US indexes stood after the 9:30 a.m. ET open on Friday:

Chamath Palihapitiya cashed out his entire stake in Virgin Galactic for $211 million. The billionaire still indirectly owns 15.8 million shares in Richard Branson’s startup.

Bitcoin is struggling to break past the $50,000 level and hovered below $48,000 Friday morning.

Oil prices rose sharply overnight after the OPEC group of oil producers and its allies unexpectedly agreed to continue limiting supply. West Texas Intermediate crude jumped as much as 2.9%, to $65.66 per barrel. Brent crude, oil’s international benchmark, rose by 3.04%, to $68.78 per barrel.

Gold jumped 0.16%, to $1,703.50 per ounce. 

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US stocks mixed as investors hit pause on Monday’s rally

Traders work on the floor of the New York Stock Exchange (NYSE) on November 20, 2019 in New York City
Traders work on the floor of the New York Stock Exchange (NYSE) on November 20, 2019 in New York City


US stocks were mixed on Tuesday after a rally on Monday that saw the S&P 500 post its strongest daily gain since June, as the full reopening of the US economy seemed within reach. 

US daily coronavirus cases are falling and on track to be below 40,000 this week after a slight surge last week, according to Fundstrat data. This positive news, along with falling volatility and rising bond prices, likely led Monday’s rally that investors are hoping to continue on Tuesday.

Here’s where US indexes stood after the 9:30 a.m. ET open on Tuesday:

US and European markets are racing ahead of their real economies, potentially creating bubbles that could pop, China’s banking regulator has warned.  Guo Shuqing, chair of the China Banking and Insurance Regulatory Commission, said US and European markets are racing ahead of their real economies, potentially creating bubbles that could pop. 

Zoom jumped 9% after the video platform beat earnings estimates and forecasted strong growth. The company’s revenue forecast for the coming year was above Wall Street expectations.

Bitcoin traded above $48,000 after briefly climbing back above $50,000 for the first time in six days. 

Oil prices were higher. West Texas Intermediate crude jumped as much as 0.54%, to $61 per barrel. Brent crude, oil’s international benchmark, rose by 0.44%, to $63.96 per barrel.

Gold jumped 0.16%%, to $1,726.20 per ounce. 

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