Oil prices could slump to $75 a barrel in a recession

For now analysts don’t see a recession and still expect Brent crude to average $102 per barrel in 2022

Oil prices could surge higher or plunge lower depending on what happens next in global markets, according to Bank of America. Mounting fears of a recession have sent crude prices to their second consecutive weekly decline, but they remain above $100 per barrel amid still-high demand and constrained supply, while inflation, hawkish central banks and war still loom.

“Surging inflationary pressures from food to energy to services, coupled with fast paced interest rate hikes, suggest oil demand will struggle to fully recover to pre-pandemic levels until next year,” analysts wrote in a recent note. The various crosscurrents and risks left BofA with a wide range of possibilities. For now, analysts don’t see a recession and still expect Brent crude to average $102 per barrel in 2022 and 2023, after averaging about $104 for the year to date.

On Friday, Brent oil rose 2.6% to nearly $113 per barrel, but is down from a high of $133 reached in March. A recession, however, would trigger a pullback in fuel consumption, and oil prices could crash more than 30% from current levels, according to BofA’s estimates. If growth does go south, any easing in monetary policy from central banks would support oil prices somewhat. So even in the event of a recession in 2023, BofA sees crude averaging more than $75 a barrel.


Why Shares of Silvergate Capital Are Rising

Silvergate Stock Price Could Rise 50%

Bank of America analyst Brandon Berman initiated a buy rating of Silvergate Capital and a $200 price target, implying about 45% upside from its current levels.

Silvergate Capital has built a real-time payments system that better facilitates cryptocurrency trading because parties on the network can send and clear transactions instantly at any time, whereas most of the U.S. payments system doesn’t operate in real time. Cryptocurrencies trade around the clock. Silvergate also earlier this year acquired the assets behind Meta Platform’s Diem and U.S. dollar stablecoin and is planning to eventually roll out a stablecoin later this year.

Berman likes Silvergate for several reasons. For one, he said the company “is one of the best-positioned companies to benefit from the expanding use of stablecoin for payment, commerce, and remittance.” He also thinks that Silvergate as a regulated bank is better positioned to operate in the uncertain regulatory environment. Finally, Berman believes Silvergate can grow its balance sheet much, much faster than atraditional bank.