Oil could exceed $ 100 in cold winter

• The price of oil could exceed $ 100 a barrel for the first time since 2014, according to Bank of America.
• This could trigger inflation that will lead to the “next macro hurricane”.
• Analysts have explained three reasons for the possible price spike.
• See more stories on the Insider business page.

Brent crude, the world’s benchmark oil price, could surpass $ 100 a barrel for the first time since 2014, in the event of another cold winter, according to a Bank of America note on Friday.

And the tightening global natural gas market could put more upward pressure on crude, as high natural gas prices encourage a switch to oil.

The price of Brent oil rose 0.27%, to $ 75.23 per barrel at 11:45 a.m. ET Friday, while West Texas Intermediate crude oil rose 0.42%, to $ 78.64 per barrel .

Rising oil prices could trigger inflation that will trigger the “next macro-hurricane,” analysts led by Francisco Blanch said. There can be three reasons for a jump:

• Gas-oil substitution of up to 2 million barrels per day due to high gas prices
• Increased demand for crude by up to half a million barrels per day due to cold winter
• Aviation consumption rises to 500,000 barrels per day in the first quarter of 2022 due to an airline boom as the economy reopens.

“If all of these factors come together, oil prices could skyrocket and lead to a second round of inflationary pressures around the world,” analysts said. “In other words, we may only be one storm away from the next macro-hurricane.”

Weak supply coupled with consumers benefiting from stimulus liquidity has led to the tightening of the global commodities market, analysts said. So far, soaring energy and goods prices have pushed inflation beyond 5% in recent months.

Beyond a winter storm and current policies, BofA said a common theme is simply underinvestment in commodities due to a lack of investor appetite for conventional energy.

“Note that these tighter physical markets have come about just as monetary and fiscal policy is being pushed to its limit,” analysts said. “Investors are just wary of the low investment returns of the last decade and the green climate policies of the next.”

Brent crude topped $ 80 a barrel earlier this week, but backed down on expectations that OPEC and its allies are considering a production increase of 400,000 barrels a day at their meeting next week.

Meanwhile, star stock picker Cathie Wood, founder of Ark Invest, took to Twitter on Thursday to express a long-term drop in oil.

“The rise in oil prices this year is more a function of supply than demand,” she said in a statement. Tweeter. “At the turn of the 20th century, whale oil suffered the same fate and the prices of whale oil fluctuated considerably. @ARKInvestthe research is correct, oil prices will suffer the same fate as whale oil prices. “