Oil Prices Head Beyond $ 80 in 2022: Analyst
The renewed strength in oil prices of late is just the beginning, says veteran industry analyst Phillip Streible of Blue Line Futures.
Streible believes oil prices may hit $ 60 in the near term due to slowing demand linked to Omicron. But it will likely prove to be a buying opportunity ahead of a “long-term” rally in 2022.
“We will see the image of demand continue to improve [summer] driving season. Hopefully we can put this pandemic behind us. You will see that all of this pent-up travel demand is really going to pick up. Flights were fairly full over the bank holiday weekend, but we expect them to become even more full as capacity increases. If you look at the supply side of crude oil, we have 432 million barrels. The five-year average is $ 460 million, so supplies are pretty tight. We do not expect OPEC to take any reaction by repeating its image of the offer. So we expect any kind of small supply shock to push prices up. We expect $ 85 to $ 90 [a barrel] oil next year, ”Streible told Yahoo Finance Live.
The call comes as the bulls start to take over the oil market despite the rapidly spreading Omicron variant starting to weigh on global economic growth.
Oil prices hit a one-month high on Monday, a move that saw benchmark Brent crude hit around $ 79 a barrel. The price of brent crude oil continued its rise on Tuesday.
The bullish move to the upside, however, did not extend to the more well-known stocks in the industry.
Exxon and Chevron shares have each risen around 2% in the past five trading days, trailing gains from the Dow Jones Industrial Average (2.7%) and S&P 500 (3%), according to Yahoo Finance Plus Data.
The recent uptrend in oil portends further pain at the gas pump in 2022.
Gas price monitoring agency GasBuddy predicted in a new report on Tuesday – that he shared exclusively with CNN – that the national average price of gasoline will reach $ 3.41 per gallon in 2022, compared to $ 3.02 this year. GasBuddy hasn’t ruled out gas prices hitting $ 4 a gallon by the Memorial Day holiday.
“There is no question,” Streible said, on whether gas prices will rise in 2022.