Is the Oil Market Really Great Again?

Last year, oil demand contracted nearly 9 MMbbl/d as the global economy locked down under the COVID-19 siege. Oil prices swooned. The OPEC+ group responded with record cuts in output. With no one to sell to and facing increasing storage costs, non-OPEC producers shut in barrels, too. These curbs in supply alongside a partial rebound in demand lifted prices off the mat during the second half of 2020 (Figure 1). The year ended on an optimistic note with the development and approval of effective vaccines against the virus. Today, the turmoil has subsided. The price of Brent is more than $40/bbl higher than at its low point last year, vaccine programs are underway, the OPEC+ group continues to be judicious about the level of its collective production and U.S. liquids output is ebbing. Recovering demand and soft supply is a recipe for better prices, with Brent now flirting with $60. Market sentiment has turned the corner. But let’s not get too complacent. While the worst of the devastation wrought by the pandemic on the global economy and oil market may be behind us, wolves still hover at the edge of the forest. And any one of them could spoil the… continue reading

Continue reading Is the Oil Market Really Great Again?. This article appeared first on CTRM Center.

Source: CTRM Center

Related Posts

Leave a reply