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Tuesday, November 30, 2021

Crude Outlook 2021: Be ready for inflation, can record petrol and diesel prices

In the midst of the corona epidemic, the year 2020 was like a coaster ride for the worldwide financial market.

Crude and Natural Gas Outlook 2021: Petrol-diesel prices are making a record of highs and there is no hope of getting relief soon in 2021. Last year, due to the lockdown imposed due to the Corona epidemic, the consumption of oil was reduced drastically as the transport was affected as well as industries and businesses were almost stalled. However, economic activity gradually gained momentum after the lockdown was lifted. However, while the prices of crude are increasing, petrol and diesel are also becoming increasingly expensive.

Crude prices fell sharply in 2020 due to the Corona epidemic and the price war between Saudi Arabia and Russia. Although there was recovery after that, but still its demand fell by 19.65 percent annually. Now due to the recovery in the global economy, its consumption is increasing and it is expected to grow further. In such a situation, the price of crude has also started intensifying. Experts are further talking about being crude and expensive. At present, crude oil is around Rs 3800 per barrel on MCX and in 2021 it is estimated that it can show levels up to 4000-4150. Talking about natural gas, due to heating demand and reduced production in the US, its price may see a boom this year.

Crude and natural gas prices expected to rise this year

In the midst of the Corona epidemic, the year 2020 was like a coaster ride for the worldwide financial market. The year-to-year fluctuations continued in 2020 due to a decline in growth due to the Corona epidemic, the announcement of relief packages and extremely lax monetary policies. However, the arrival of the vaccine and the relief packages have raised hopes of early economic recovery. This will increase investment and increase expenditure, which can increase commodity prices.
Last year, the United States approved a relief package of $ 2 trillion (Rs 146.73 lakh crore) due to the fear of recession due to corona epidemic to support the economy. After this, US President Donald Trump approved an additional package of $ 2.3 trillion (168.74 lakh crores). The US Fed Reserve lowered interest rates last year in March 2020, to near zero. It is being hoped that the US Fed Reserve will not make any changes till 2022 next year to strengthen the US economy.

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Crude oil

  • Talking about crude oil, for the first time due to Corona epidemic last year, its prices went below zero. WTI Future contract prices for May 2020 reached minus $ 37 per barrel in April. The decline was due to declining economic activity and restrictions on transport. The price of oil was not reduced because of lack of storage facility. Crude is currently beyond 50 dollars.
  • Talking about the domestic market, in April 2020, it had dropped to an all-time low of Rs 795 per barrel, which was 83 per cent lower than its high level of Rs 4670 per barrel. Although the economy started to recover, its sentiment strengthened.
  • Oil prices also received support from producers. By the end of the year, its production was down by 19.65 percent.
  • Due to positive news about the vaccine, economic recovery is expected in 2021 this year. In such a situation, oil demand will increase.
  • This year, in 2021, crude oil can show a level of 4000-4150 per barrel.

natural gas

  • Last year, the price of natural gas increased sharply in 2020 due to supply constraints. In 2020, its prices rose by 16.68 percent on NYMEX and 16.68 percent on MCX.
  • During the winter season in the US, its prices remained strong due to heating demand. Generally, this is less during April to October, but the price has remained strong last year as Hurricane reduced its output in the US and demand increased in the US and Europe since the lockdown was lifted.
  • In the last two months of 2020, the price declined due to reduced heating demand.
  • Talking about 2021 this year, the price may continue to rise due to its domestic demand in the US and an increase in LNG exports and reduced production.
  • In 2021, its prices can show a level of Rs 265 per MMBTU in the medium term and then Rs 283 per MMBTU after that.

(Note: This information is given on the basis of information received from Religare Broking’s VP-Metal, Energy and Currency Research, Sugandha Sachdeva.)

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