Morgan Stanley predicted Brent crude oil prices will reach $100 per barrel by the third quarter amid strong demand and constricted supply.
Brent recently traded at $90.46 a barrel, near a seven-year high. So reaching $100 would mean an 11% gain. Gasoline prices generally move in synch with crude prices. If gasoline was to rise 11%, that would put the average national price at $3.73 a gallon, up from $3.36 Friday, according to AAA data.
Oil prices have soared in recent months, as economies recover from the Covid pandemic, and OPEC keeps a tight lid on supply.
“To balance the physical flow of oil over the course of 2022 — that [$100 per barrel] is what we need,” Morgan Stanley’s chief commodity strategist Martijn Rats told CNBC. “We need a price that slows down this demand’s recovery and that is a high price.”
U.S. crude prices recently traded at $87.25 a barrel and have soared 67% over the past year.
Low inventories, low spare capacity and low spare investment will boost oil, according to a Morgan Stanley commentary last week cited by CNBC and The Wall Street Journal. Morgan Stanley calls for U.S. crude prices to hit $97.50 this year, The Journal said.
The paper reported that Goldman Sachs and Bank of America have issued bullish oil price forecasts too. BofA forecast that Brent crude will hit $120 by July and U.S. crude will hit $117. And Goldman sees Brent at $100 by the third quarter and U.S. crude a bit below that.