With prices recovering to levels in 2018 and 2019, investment bank Goldman Sachs expects Brent crude to rise to $ 80 a barrel this summer.
The oil market remains in positive territory with sentiment and stronger fundamentals driving the trend.
Despite an increase in US fuel inventories, West Texas Intermediate (WTI) crude is holding above $ 70 / bbl and Brent crude at around $ 73 / bbl at the end of the week.
The expected volatility remains in the market and each heading affects the price.
Higher stocks pushed the price down slightly by the end of the week, as did rumors of a settlement to Iran’s nuclear talks.
Hope for recovery
The focus on resuming global growth remains strong, and hopes for a recovery in fuel and crude oil demand are materializing.
The past three weeks have performed well in the oil market as vaccinations have increased in many countries and restrictions on the pandemic have been relaxed.
With prices returning to 2018 and 2019 levels, the investment bank expects Brent crude to rise to $ 80 a barrel this summer.
C-Markits CEO Youssef Alshammari says the strength in the market “is supported mainly by expectations of rising demand in the summer and inflation levels that keep the US dollar index low.”
He also notes that since negotiations with Iran stalled until August, the market does not expect additional supplies.
Looking at production in the US markets, Alshammari says he sees no change, “despite the significant increase in prices, this year we do not expect significant revenue from US shale production, given the small number of oil rigs in the US.”
According to a report from the US Energy Information Administration for this month, oil inventories have declined and refining exceeded 90% for the first time in a year.
The International Energy Agency and OPEC released their monthly oil reports this week, with the IEA saying it expects additional demands on the OPEC + group.
Oil demand is expected to rise in 2022
The report says that oil demand is expected to rise in 2022, and it is estimated that OPEC + will need to “increase oil supply by 1.4 million barrels per day, compared to the target from July 2021 to March 2022.”
The IEA has made clear that global oil demand is picking up, but industry analysts have questioned its mid-May scenario report, which calls for an end to funding for new hydrocarbon projects if the world wants to contain emissions and manage climate change.
OPEC’s monthly oil report suggests that the global economy will grow in the second half of the year, keeping the growth in oil demand the same as last month.
Total oil demand in 2021 is expected to reach 96.58 million barrels per day. OPEC also predicts that the global economy will grow 5.5% in 2021, just like last month.
The report notes that while “global recovery has been delayed by renewed COVID-19 infections and renewed restrictions in key countries,” “ongoing vaccination efforts and easing restrictions” are encouraging that the pandemic can be contained in few countries. in the coming months. “
OPEC expects total global oil demand to reach 99 million barrels per day in the second half of this year.
Since we are near the middle of the year, a recovery in the oil market of about 40% is welcomed, as well as a possibly slower recovery in the global economy.
Uncertainty still rules the day, but positive sentiment towards a strong second half appears to be driving the market.