DBRS Morningstar Updates Oil and Natural Gas Price Forecasts: Stronger Fundamentals Prompt Upward Revisions

The prices of West Texas Intermediate and Brent crude oil have continued to march higher this year, recently reaching heights not seen since 2014. Natural gas prices throughout North America have also increased materially this year. The price increase for oil has been fueled by (1) recovering global oil demand as economies around the globe, in particular advanced economies, return to more normal levels of economic activity, (2) a slow unwinding of previous production cuts by OPEC and its alliance of key non-OPEC producers (OPEC+) such that recovering global demand has outpaced global supply causing global inventories to contract considerably, and (3) constrained capital spending by the industry, which has tempered the growth in non-OPEC supplies primarily the growth in U.S. shale oil production. The current price of WTI is USD 81 per barrel and the price of Brent oil is greater than USD 82 per barrel. These prices are about 40% above pre-pandemic price levels and were last realized in late 2014 just before an extended oil price crash. The global oil price recovery has unfolded more rapidly and stronger than our previous expectations. As a consequence, we have made upward adjustments to both our oil and natural gas price forecasts through 2023 and beyond.