The resumption of faltering oil demand and the absence of a COVID-19 vaccine will likely push the oil price recovery to $ 50 a barrel in 2021, as inventories continue to build up in 2020 amid low margins and refinery demand, according to Saxo Bank.
“Crude Oil has been trading in a fairly stable pattern in the low $ 40 since June, however, we are seeing evidence in the physical market data that risks are emerging. Low refinery margins, mainly caused by excess diesel and unwanted jet fuel, lead to rapid filling of storage facilities, ”said Ole Hansen, head of commodity strategy at Saxo Bank, during an online briefing, published by Times of Oman.
Despite the fact that oil prices managed to find support on Tuesday after last week’s 15% correction, Saxo Bank does not see too much upside potential for oil prices in the near term as fundamentals remain weak .
The correction actually helped prices fall further in line with the fundamentals of the currently fragile outlook for the oil market, Hansen wrote in a post on Wednesday.
“As the pandemic continues to slow the recovery in fuel demand, the upside potential in our view should remain limited over the coming months. With that in mind and given the risk of increased production from Libya, we see Brent crude stabilizing in a new lower range of around $ 40 / bbl before finally recovering at year end and 2021 ” , did he declare.
In 2021, oil prices could reach $ 60 a barrel, according to Citigroup and Goldman Sachs.
Oil prices are expected to rise to $ 60 a barrel by the end of next year, as excess supply will have been reduced by then, according to Citigroup, which is bullish on oil.
Goldman Sachs expects Brent Brent to hit $ 65 per barrel in the third quarter of 2021, although it may end the year lower, at $ 58 per barrel. Goldman also sees WTI Crude rebound to $ 55.88 per barrel in the third quarter of next year, from $ 51.38 per barrel in the previous forecast.
By Charles Kennedy for Oil chauffage
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