JP Morgan says 2022 could lay the foundation for a “far more vibrant economic environment” as the pandemic eases to an endemic disease. But other forecasters aren’t so sure.
The Energy Information Administration (EIA) slashed its 2022 global oil demand forecast this week, contrary to JP Morgan’s bullish view on oil and the economy at large.
Its new forecast has been revised downward to 100.46 million barrels per day in 2022, a downward adjustment of 420,000 barrels per day from last month’s 2022 outlook. The EIA explained its adjustment by citing the uncertainty that has been injected into the market by the Omicron variant, which has already triggered new Covid restrictions around the world.
But Omicron hasn’t stopped JP Morgan’s bullish view. Last week, JP Morgan said that 2022 could usher in oil prices as high as US$125 per barrel. By 2023, oil prices could reach US$150. This week, it cited household net worth that is at all-time highs in many developed countries, which will lead to strong consumption overall.
Strong consuming behavior naturally translates into higher oil demand. JP Morgan isn’t the only one calling for the pandemic’s end next year. Bill Gates, too, has expressed some optimism that the pandemic’s acute phase could come to a halt some time next year.
If that turns out to be true, oil demand could come roaring back well beyond pre-covid levels.