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A lifting of virus restrictions, as vaccines are rolled out, should allow for a strong bounce-back in oil demand and prices in the second half of next year, Trend reports with reference to UK-based Capital Economics research and consulting company.
“Indeed, after crashing in early 2020 in response to widespread lockdown measures, the price of oil is still down by over 20 percent year-to-date. By contrast, almost all other commodity prices are now above their previrus levels, which owes in large part to a robust recovery in China’s demand. At the turn of the year, all eyes will be on the OPEC+ meeting on 4th January and the release of China’s PMI data for December,” reads the report released by Capital Economics.
The company said that oil prices have been on a rollercoaster in 2020, cratering early in the year before partially recovering. “It’s worth remembering that the initial price collapse was not entirely because of the virus-induced collapse in demand but was also due to the breakdown of OPEC+ supply restraint in March. Next year, we expect OPEC+ supply to remain constrained and demand to bounce back (particularly in H2 2021). This should keep the market in deficit, thereby pushing up the price of Brent to $60 by end-2021.”
Meanwhile, although other energy commodity prices also plummeted in the early part of the year, most have returned to pre-virus levels, according to Capital Economics.
“In the case of Asian LNG, a robust revival in demand, combined with supply outages, have pushed prices to multi-year highs. What’s more, the recovery in natural gas prices has also pushed coal prices higher, as the two compete in power generation. That said, we expect coal prices to ease back next year as the shift away from coal-based power intensifies.”
