(13 May 2021) Brent crude oil prices will average $62.26 per barrel in 2021 and $60.74 per barrel in 2022 according to the forecast in the most recent Short-Term Energy Outlook from the US Energy Information Administration (EIA). This represents a rebound from the 2020 average of $41.69 per barrel, but it is still lower than pre-COVID levels.

The International Monetary Fund, in its latest release of the World Economic Outlook, predicts a similar recovery scenario, with Brent oil prices rising to US$59.74 per barrel in 2021 and then to $56.23 in 2022.

Oil price forecasts depend on the interaction between supply and demand for oil in international markets. The most important supply-side factors impacting pricing in the next few years are expected to include US shale oil productionUS crude oil stocks, and OPEC oil supply.

A chronology of oil price swings since the end of 2019:

  • In December 2019, Brent crude price averaged $67 per barrel, which was $10 higher than at the end of December of the previous year. This reflected the expectation of improving economic conditions in 2020.
  • However, in January 2020, oil prices lost all the gains accumulated since October 2019 as the Coronavirus outbreak in China affected oil demand due to travel restrictions and decreased entertainment spending.
  • In early March 2020, OPEC and non-OPEC partner countries failed to reach an agreement on oil production cuts. As a result, the two largest oil producers — Russia and Saudi Arabia — commenced a price war, flooding market with cheap oil against the backdrop of falling global demand as local coronavirus outbreaks developed into a pandemic. Oil prices plummeted, as a result, soon reaching a twenty-two-year low of $9.12 per barrel in April.
  • On April 12, OPEC+ countries agreed to cut oil production by 9.7 million barrels/day during the next two months. Anticipation of the successful deal led to an oil price rebound. But on April 20, prices for WTI futures that were due to expire the next day plunged below zero for the first time ever. Because of the dramatic shrinkage of oil demand due to the Coronavirus lockdown, companies had filled their entire storage capacity with unused oil and were trying to get rid of expiring futures contracts at their cost.
  • By the end of 2020, when the first COVID-19 vaccination campaigns had started, the crude oil price reached $52 per barrel.
  • During the first months of 2021, oil prices continued growing, reaching a one-year maximum of $69.95 on March 5. The gains reflect improving oil demand due to progress in COVID-19 vaccination as well as recovering global economic activity. Rising shipping costs and disruptions to petroleum supply from extreme winter weather in Texas also put upward pressure on crude oil prices in February.


Price forecasts for other critical commodities:

gold | silver | copper | aluminum | nickel | zinc | coal | natural gas 

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