Oil prices to average $91 per barrel in 2022, says Fitch

Fitch Solutions has forecast an average $91 per barrel for Brent crude oil in 2022 on the back of current supply constraints continuing well into that year, it said.

In the years leading up to 2022 however, Fitch’s analysts are predicting the benchmark crude to average $75 per barrel this year, $82 per barrel in 2019, $85 per barrel in 2020 and $89 per barrel in 2021, according to the report seen by business a.m.

However, the forecasts are higher than the Bloomberg consensus for Brent, which forecasts the commodity to average $73.6 per barrel in 2018, $75.3/per barrel in 2019, $72 per barrel in 2020, $70 per barrel in 2021 and $66.2 per barrel in 2022.

“The outlook on Brent is broadly bullish, driven by rising constraints on the supply side. Loss of exports from Iran, low inventories, limited spare capacity and continued under-investment in the sector will drive the market into deficit from 2019,” analysts at Fitch Solutions said in the report.

For the West Texas Intermediate (WTI) grade of the commodity, the analysts forecast that the average price will hit $68 per barrel this year, $75 per barrel next year, $81 per barrel in 2020, $85 per barrel in 2021 and $87 per barrel in 2022, while Bloomberg consensus for WTI forecasts the commodity to average $68 per barrel in 2018, $68.9 per barrel in 2019, $65.4 per barrel in 2020, $63.5 per barrel in 2021 and $62.3 per barrel in 2022.

“Various bottlenecks have emerged in the Permian basin this year. In particular, insufficient takeaway capacity has put sustained downward pressure on regional price spreads, crimping investment and production. However, rapid pipeline expansions will erase this bottleneck from Q219,” Fitch analysts said.

They also stated that, on paper, Saudi Arabia has sufficient capacity to keep the market in balance, but said that the United States will be the dominant growth market over 2019 and 2020, “adding around twice the number of barrels as Saudi Arabia.”