oil

The U.S. benchmark for oil is expected to be around $43.25

According to a 10 investment banks survey, Futures for West Texas Intermediate, the U.S. benchmark for oil, is expected to be around $43.25 a barrel in the first quarter. Significantly, on Friday, West Texas Intermediate declined by 0.4% and settled at $45.53 a barrel.

Analysts said that a meeting of the Organization of Petroleum Exporting Countries and its partners would be held next week, where the alliance will decide on production levels from January. Moreover, the meeting will determine the direction of the market in the short term.

We all know that coronavirus vaccines could boost global economic prospects and bolster demand for oil in 2021. However, it has to be mentioned that elevated levels of Covid-19 infections in the U.S. and Europe could prompt new travel and business restrictions, which could decline demand.

According to Richard Fullarton, chief investment officer at hedge fund Matilda Capital Management, we will have volatility as we get to the end of the coronavirus pandemic. He announced that we don’t know if or when the vaccine will come, and we don’t know if OPEC will cut or raise production too early.

Additionally, futures for Brent crude may average nearly $46 a barrel in the first quarter of the year. On Friday, the gauge increased by 0.8% and settled at $48.18 a barrel. Both Brent and WTI have boosted over 25% in November and are on course for their second-best monthly performances in over a decade. Moreover, in May, Brent advanced 43% as the market rebounded from the multiyear lows hit in spring because of lockdowns and travel banks.

The West’s latest round of lockdowns has been less severe

Furthermore, the West’s latest round of lockdowns has been less severe than those in the spring and less disruptive to economic activity. Combined with more purchases of physical barrels of oil in Asia, that has helped strengthen demand. Furthermore, the market may get another raise if low-interest rates and large stimulus packages in the United States weaken the greenback in the following months, making oil cheaper for other countries as it is denominated in the dollar in global markets.

According to the banks’ forecasts, Brent prices may recover to more than $53 a barrel in the Q4 of 2021, still a far cry from the $68.91 reached in early January until the pandemic-led plunge in demand. They say that WTI futures could rise to more than $50 a barrel in the last months of 2021. The vaccine will have helped normalize economic activity and allow the world to start burning through its crude glut.

Additionally, Iraq and Nigeria, whose economies have been damaged by low oil prices, are pushing for production raises. According to S&P Global Plats, the United Arab Emirates is considering quitting OPEC altogether.

Sending
User Review
0 (0 votes)

RELATED POSTS

Leave a Reply

tmn-img-28-1

Share this on

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

Rec­om­mended for You

Subscribe to Our Newsletters

Have The Best Of Trade Market News Delivered Directly To Your
Mailbox. Subscribe To Receive The Latest Market News.