NEW YORK, Dec 16 (Xinhua) – The recent rise in crude oil futures prices to their highest level since early March was largely driven by an upbeat sentiment around COVID-19 vaccines but not market fundamentals, according to several research institutes and companies.
The understandable euphoria around the start of the vaccination program partly explains higher oil prices but it will be several months before mass inoculation occurs to economically active people and a relevant impact on oil demand, a report said. monthly oil released by the International Energy Agency (IEA) on Tuesday.
Oil will kick in relatively weakly in global oil demand back in 2021, and will remain well below its pre-release levels while suppliers settle to get back into the market, he said. webcast by Mehran Nakhjavani, global strategy management manager with MRB Partners Inc. . Wednesday.
Citing weaker jet fuel demand, the IEA report cut the forecast of global oil demand in 2021 by 170,000 barrels per day with oil demand in the first half of 2021 revised down by 300,000 barrels every day.
The positive news about the emergence of an effective COVID-19 vaccine has created a wave of optimism across commodity markets despite the fundamentals largely unchanged, said Chris Midgley, head of global analysis with S&P Global Platts.
“We believe the worst is yet to come before we truly move to the vaccine delivering real positive effects on energy bases,” Midgley said recently.
U.S. Purchasing Managers ’Product Index December (PMI) covering both manufacturing and service sectors fell to 55.7 percent from 58.6 percent in November and market expectations fell 57.4 percent among COVID-19 cases rises and relocation restrictions in many states, according to a report by IHS Markit on Wednesday.
“In the short term, oil demand remains weak and we have reduced our estimate for the fourth quarter of 2020 by 0.2 million barrels per day on small data revisions in different countries,” the IEA said.
The recovery of global oil demand in the second half of 2020 is almost entirely due to China’s rapid reversal from lockout while global oil demand in the fourth quarter of this year remains 6.2 million barrels per day lower year after year, according to the IEA.
Midgley said total fundamentals, overall, will resume the rise above sentiment and that Dated Brent oil prices should ease in the short term to the region of just over 40 U.S. dollars per barrel.
Midgley predicts that Brent crude oil futures prices would move to 50 US dollars by the end of 2021 with a warning that must be issued with uncertainty about additional capacity and COVID use -19.
Meanwhile, Nakhjavani said that supply prices will dampen oil prices in 2021 and that oil prices should move sharply on both sides next year.
Brent crude oil futures prices would average 49 U.S. dollars per barrel in 2021 up from an expected average of 43 U.S. dollars per barrel in the fourth quarter of 2020, according to the short-term energy forecast report. most recent period with the U.S. Energy Information Administration.
Brent crude oil futures price for delivery in February 2021 remains above 50 US dollars per barrel on Wednesday after closing above the 50 dollar U.S. per barrel psychological threshold on Dec. 10 for the first time since early in March. Enditem