“If all these factors come together, oil prices could spike and lead to a second round of inflationary pressures around the world,” analysts including Francisco Blanch wrote in the note. “Put differently, we may just be one storm away from the next macro hurricane.”
Diesel prices could climb above $120 a barrel, the bank said, with stockpiles falling as refiners prioritized the production of gasoline in recent months. Other oil-based fuels used in heating are already seeing an uplift, with U.S. propane prices at their highest since 2014.
As well as the cooler weather, BofA also said that underinvestment in commodities due to poor returns is also set to fuel higher oil prices in the longer-term.
“A multiyear run up in crude oil prices is now in the cards,” the bank said.