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Tribune News Network
Doha
With oil markets roaring ahead in the first two weeks of 2021 to record a 10-month high, analysts do not rule out that prices of Brent and WTI could even breach $70 per barrel and $65 per barrel respectively by year-end.
The US Energy Information Administration (EIA) has already raised modestly its forecast for Brent spot average and West Texas Intermediate (WTI) spot average prices for 2021.
However, MUFG Bank is more bullish on its oil price narrative with Brent trading at a ten-month high of $56 per barrel, up 8 percent year-to-date.
“Such an early pivot in this final stage of our post-virus oil price thesis brings clear upside risks to our Brent and WTI forecasts and we do not rule out breaching $70 per barrel and $65 per barrel, respectively by year-end, as markets carve out new contours of normality towards a post-virus equilibrium,” MUFG Emerging Market Research Director Ehsan Khoman said.
The bank noted that a weaker dollar has been a core driver of the upside, buoyed also by the sheer velocity of the latest Opec+ actions to remove 1.1 million b/d of crude compared to expectations, which should counteract demand weakness stemming from mobility restrictions in parts of the world, leading to a much tighter global oil market in the first half of 2021, especially as vaccine rollouts accelerate this spring.
EIA, on the other hand, sees 2021 Brent spot prices averaging $52.70 per barrel and 2021 WTI spot prices averaging $49.70 per barrel.
The EIA said in its January short-term energy outlook (STEO) report that oil prices are further expected to increase in 2022. According to the STEO, Brent spot to average at $53.44 next year and WTI spot to average at $49.81.
The EIA estimates that global consumption of petroleum and liquid fuels averaged 92.2 million barrels per day for all of 2020, which it said was down nine million barrels per day from 2019. The organisation expects global liquid fuels consumption will grow by 5.6 million barrels per day in 2021 and by 3.3 million barrels per day in 2022.
The EIA also estimates that global liquid fuels inventories rose at a rate of 6.5 million barrels per day in the first half of 2020 before declining at a rate of 2.4 million barrels per day in the second half of 2020. It forecasts that global inventories will continue to fall, declining at a rate of 0.6 million barrels per day this year and 0.5 million barrels per day next year. US crude oil production is estimated to have fallen from the 2019 record level of 12.2 million barrels per day to 11.3 million barrels per day in 2020. The EIA expects that annual average production will fall to 11.1 million barrels per day this year before rising to 11.5 million barrels per day in 2022.
The EIA noted that its January STEO remains subject to heightened levels of uncertainty because responses to Covid-19 continue to evolve.
“Reduced economic activity and changes to consumer behavior in response to the COVID-19 pandemic caused energy demand and supply to decline in 2020,” the EIA said.
Doha
With oil markets roaring ahead in the first two weeks of 2021 to record a 10-month high, analysts do not rule out that prices of Brent and WTI could even breach $70 per barrel and $65 per barrel respectively by year-end.
The US Energy Information Administration (EIA) has already raised modestly its forecast for Brent spot average and West Texas Intermediate (WTI) spot average prices for 2021.
However, MUFG Bank is more bullish on its oil price narrative with Brent trading at a ten-month high of $56 per barrel, up 8 percent year-to-date.
“Such an early pivot in this final stage of our post-virus oil price thesis brings clear upside risks to our Brent and WTI forecasts and we do not rule out breaching $70 per barrel and $65 per barrel, respectively by year-end, as markets carve out new contours of normality towards a post-virus equilibrium,” MUFG Emerging Market Research Director Ehsan Khoman said.
The bank noted that a weaker dollar has been a core driver of the upside, buoyed also by the sheer velocity of the latest Opec+ actions to remove 1.1 million b/d of crude compared to expectations, which should counteract demand weakness stemming from mobility restrictions in parts of the world, leading to a much tighter global oil market in the first half of 2021, especially as vaccine rollouts accelerate this spring.
EIA, on the other hand, sees 2021 Brent spot prices averaging $52.70 per barrel and 2021 WTI spot prices averaging $49.70 per barrel.
The EIA said in its January short-term energy outlook (STEO) report that oil prices are further expected to increase in 2022. According to the STEO, Brent spot to average at $53.44 next year and WTI spot to average at $49.81.
The EIA estimates that global consumption of petroleum and liquid fuels averaged 92.2 million barrels per day for all of 2020, which it said was down nine million barrels per day from 2019. The organisation expects global liquid fuels consumption will grow by 5.6 million barrels per day in 2021 and by 3.3 million barrels per day in 2022.
The EIA also estimates that global liquid fuels inventories rose at a rate of 6.5 million barrels per day in the first half of 2020 before declining at a rate of 2.4 million barrels per day in the second half of 2020. It forecasts that global inventories will continue to fall, declining at a rate of 0.6 million barrels per day this year and 0.5 million barrels per day next year. US crude oil production is estimated to have fallen from the 2019 record level of 12.2 million barrels per day to 11.3 million barrels per day in 2020. The EIA expects that annual average production will fall to 11.1 million barrels per day this year before rising to 11.5 million barrels per day in 2022.
The EIA noted that its January STEO remains subject to heightened levels of uncertainty because responses to Covid-19 continue to evolve.
“Reduced economic activity and changes to consumer behavior in response to the COVID-19 pandemic caused energy demand and supply to decline in 2020,” the EIA said.
