Some of the world’s biggest investment and energy intelligence firms are giving different predictions for 2021 global outlook for oil price despite disciplined output by Organisation Petroleum Exporting Countries (OPEC) and its allies, based on a potential coronavirus vaccine boosting demand in 2021.
The crude oil market has had an especially volatile year in 2020, starting with a price war between Saudi Arabia and Russia, to the impact of the coronavirus pandemic on demand including a drop to negative prices for the first time, a rise in prices following an agreement among oil producers to extend production cuts and news of Covid-19 vaccine development.
World Bank
The World Bank is expecting an average oil price of $44 per barrel next year and $50 a barrel in 2022, up from expected $41 in 2020.
According to the Washington D.C based institution, the coronavirus pandemic will continue to impact global oil demand, with consumption still below pre-pandemic levels next year. Oil consumption is expected to remain around 5 per cent lower than in 2019 by the end of 2021, the World Bank said.
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Barclays Bank
For British multinational investment bank, Barclays Bank, they are expecting Brent at $53 a barrel based on output discipline by OPEC and its allies and based on a potential COVID-19 vaccine boosting demand in 2021.
It forecast Brent at an average $53 a barrel and U.S. West Texas Intermediate (WTI) crude at $50 per barrel in 2021.
Goldman Sach
Despite the current challenges, American multinational investment bank, Goldman Sach is bullish on oil, expecting Brent to average $65 a barrel next year. The investment bank cited mass vaccinations and the limited increase in production from OPEC+ as factors driving the favourable trend.
Dutch Bank
Analysts at Dutch bank ABN Amro note that the outlook for 2021 has oil prices “caught between the hope of restoring demand and fear of overproduction.”
“Looking ahead to 2021, we believe that the main themes will remain unchanged. The demand for oil is dominated by the consequences of the fight against Covid-19. The sooner a working vaccine can lead to a relaxation of lockdowns, the sooner the demand for oil will recover,” the ABN analysts explained in their latest oil prices prediction.
“We expect a rapid revival of the US shale oil industry to take much longer. The new legislation on production on federal land, stricter environmental requirements by the Biden Administration, and the increasing difficulty of finding funding for shale oil/ gas will put a ceiling on oil production in the US.”
Canada’s TED Securities Analysts at Canada’s TED Securities noted: “The oil glut should be cleared by the end of 2021, fueled by normalizing demand for products and by OPEC+ supply management.”
“In particular, we expect under-producing refiners and recovering demand to tighten product inventories and support crack spreads,” analysts said.
They noted that “Great Rebalancing” is underway, yet some concerns still remain, particularly as Iran is planning to grow its oil production in the next year, suggesting the nation is readying for a potential return to the negotiating table with the President-elect.
OPEC+ agreed to increase oil production by 500,000 barrels per day in January rather than 2 million barrels per day as previously scheduled, and will then decide in its next meeting whether production can be further increased.
