Black Gold: Oil Prices Are Set to Hit $100 Again, BofA Says

The last time oil hit $100 per barrel was 2014, and its struggle to recover has been fitful ever since. Until recently. Eyeing that comeback, Bank of America is predicting that oil will return to $100—and might even fly as high as $175, although the timing on that is unclear.

If such a surge happens, that will mark quite a turnaround. In the early part of the last decade, West Texas intermediate (WTI) oil peaked at $113 in 2011 and hovered beneath that mark for another three years. This was amid mounting demand from fast-growing China and the inability of global producers to keep up. Then, thanks to a flood of new shale output from American drillers, the price went into free-fall, off two-thirds by 2016.

Prices lately have spurted up from the $18 low in early 2020, at the outset of the pandemic, and on Friday finished just shy of $70. The international measure, Brent, was a bit higher. The current price “looks like just the start. Fundamentals, technical, and history all point to one trajectory for price—up,” BofA analysts write in a research report.

“We remain constructive on the US oils, with the view that prospects of an extended recovery are only beginning to be reflected in valuations in our view,” the bank said.

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Today, new forces are pushing oil higher and show few signs of ebbing, BofA observed. It noted that supply is tightening while demand increases as economies open up.

Last week, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, like Russia, agreed to ease their production cutbacks, done during the worst of the pandemic. But they are hardly opening the spigots. OPEC has an incentive to cap prices, as long as its market share continues to be threatened by US producers.

The OPEC-plus group, as it’s known, has reaffirmed its plan to keep 5.8 million barrels a day off the market in July. That’s 6% of global output. Meanwhile, just 456 oil rigs are operating in the US, way off from the pre-virus level of 700, according to Baker Hughes, the oilfield services giant.

Of course, other factors might leap to the fore to limit price increases. Up ahead, there’s a possibility Iran and the US could re-establish the nuclear weapons deal and remove sanctions on Iranian oil. That added supply would likely depress prices.

Still, the consensus is for a bigger, pricier future for black gold. “Importantly, the catalysts for global mobility improvements are still ahead: vaccinations, return of air travel, and a general shift back to office working, to name a few,” the BofA report read. “In simple terms, Brent has broken $70, but the fundamentals do not point to any material loosening of the oil market any time soon.”

Oil companies’ stocks are doing very well these days, naturally. Exxon Mobil stock, for instance, is up 50% this year.

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Tags: Bank of America, Brent, oil prices, oil rigs, OPEC, Pandemic, Russia, shale, WTI

After a 41-year career, three months of retirement was apparently enough for Bob Doll. The former chief equity strategist at TIAA-owned Nuveen Asset Management, who retired in March, has been tapped by faith-based investment manager Crossmark Global Investments as its new chief investment officer.

Bob Doll

After four decades working at firms such as BlackRock, Merrill Lynch, and OppenheimerFunds Inc., Doll announced his retirement in March, but it didn’t take long for him to be lured back into the workforce. In the newly created CIO position, Doll will lead Crossmark’s investment team, and will be responsible for growing and expanding the firm’s investment product offerings, with a focus on several new actively managed products. He will also provide a weekly investment commentary on Crossmark’s website called “Doll’s Deliberations.”

“We’re thrilled to welcome Bob as our new chief investment officer,” Mike Kern, president and CEO of Crossmark Global Investments, said in a statement. “He is a powerhouse and thought leader among the investment community and will bring his outstanding 41-year track record to our investment team here at Crossmark.”

Prior to Nuveen, where he managed the large cap equity series, Doll was chief equity strategist at BlackRock, and before that he was president and CIO of Merrill Lynch Investment Managers. Prior to Merrill Lynch, he was CIO of OppenheimerFunds Inc.

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Doll is known for his annual list of 10 predictions, which he has put out for three decades. In his predictions, he forecasts themes that will move markets, monetary policy, and the economy. Doll will work out of a new office branch in Princeton, New Jersey, where he lives, and will work closely with Chief Market Strategist Victoria Fernandez, and report directly to Kern.

“I’m pleased to be joining a firm that holds its investment products to a high ethical standard and embeds its values into its overall business model,” Doll said in a statement. “It is a rarity to come across such a unique culture, and I’m excited to continue my journey in this industry in a way that is also significant for the common good.”

Doll graduated from Lehigh University with a B.S. in accounting and a B.A. in economics, and earned an M.B.A. from the Wharton School of the University of Pennsylvania.