OIL prices are set to rebound to above $60 per barrel this year as vaccines are rolled out and economies around the world begin to recover, an oil analyst said on Wednesday.
Virendra Chauhan, senior oil analyst at consultancy firm Energy Aspects, said while he doesn’t expect oil demand to return to 2019 levels, there will be a recovery in prices from 2020 levels as economies open up and mobility improves.
Demand will come from people who are eager to go on vacations again after being locked up for several months, he said.
“They will be looking to go on a holiday again,” Chauhan said in an interview with ANC’s Market Edge.
In its latest Oil Monitor update, the Department of Energy noted that Dubai crude has increased week-on-week by around $2 per barrel, with imported gasoline rising by about $2.60 per barrel and diesel by nearly $0.90 per barrel.
Oil firms hiked gasoline by P0.85 per liter, diesel by P0.30 per liter and kerosene by P0.25 per liter on Tuesday.
World oil prices gained more than one percent on Wednesday, with US crude rising for a seventh day, after industry data showed a bigger than expected drop in inventories and investors shrugged off worsening developments in the pandemic.
US West Texas Intermediate was up 67 cents at $53.88 a barrel by 0420 GMT, while Brent crude was up 79 cents at $57.37.
Both benchmarks are trading at the highest since February, before the coronavirus outbreak in China began spreading across the world and billions of people went into lockdown to prevent a pandemic that is now in a deadlier second wave.
Prices are shrugging off the latest developments in Europe and the United States where death tolls and new infections keep rising, with the focus on rollouts of vaccines, however patchy.
Even as China is grappling with its biggest coronavirus spike in months, comments from President Xi Jinping providing an upbeat assessment of the world’s second-biggest economy and biggest oil importer supported prices.
“Crude oil prices also continued to rally on economic optimism in China after President’s Xi comments and an inventory report from API showed that crude oil inventories fell more than expected,” said Avtar Sandu, senior manager commodities at Phillip Futures.
Oil stocks in the US dropped by 5.8 million barrels last week to around 484.5 million barrels, data from the American Petroleum Institute showed late on Tuesday.
That was more than analysts’ expectations in a Reuters poll for a fall of 2.3 million barrels.
Still, falling inventories and rising oil prices are likely to tempt US drillers back into the fray, especially as Saudi Arabia and other major producers cut their output, effectively ceding market share to American producers, analyst said. (with Reuters/ABS-CBN News)
