Crude Price: Crude oil prices have continued to rise since November 2. Since then, the prices of WTI crude and Brent crude have gone up by 27 per cent and 29 per cent. Brent crude is now trading beyond 50 dollars. On November 2, WTI crude was at $ 36 a barrel and Brent crude at $ 38 a barrel. This is in fact the result of the measures taken by OPEC countries to balance production and supply and the strong sentiment expected in the hope of introducing the Corona vaccine worldwide. At the same time, it is also a bright aspect for the global economy.
Vaccination campaign started in America
America has started its campaign of vaccination and it is expected that 40 Aminisan doses will be sufficient for 20 million people or 2 crore people. That is, by the end of December, these 2 crore people will be vaccinated. At the same time, by the end of March, there may be a vaccination of about 10 crore population.
Although the United States has started vaccination, some countries in Europe are still implementing lockdowns to prevent the coronavirus. A strict lockdown has been announced in Germany. Some other countries are also doing this. This reduced fuel demand.
Italy has said that it is considering a stringent ban on Christmas holidays, while most shops in Germany have been ordered to close by 10 January. They are also less likely to open soon. These incidents are contrary to the events going on in America and Europe. Even then, OPEC predicts a recovery in demand for 350,000 barrels of oil per day in 2021 due to the persistent effects of the coronavirus epidemic.
Riggs Count is growing
This week US energy firms have added the most oil and natural gas rigs in a week since January as producers have been getting good oil prices since November with $ 45 a barrel. The oil and gas rig’s count is an early indication of future production. According to Baker Hughes data, Riggs count increased from 15 to 338 in the week of December 11 and it has increased from 12 to 258 this week.
Gas and rigs have increased the most in a week since April 2019 and it has gone up from 4 to 79. Both oil and gas rigs achieved their high count since May. US crude oil production reached a 2.5-year low in May but is still expected to drop 910,000 barrels per day (bpd) to 11.34 million bpd this year. Libyan oil production, on the other hand, stood at 1.28 million barrels per day as of December 14, 2020 from 1.25 million bpd at the end of November.
OPEC estimates for 2021
OPEC estimates that global demand will increase from 5.90 million barrels per day to 95.89 million next year. It is estimated to be 350,000 bpd less than expected a month ago. The Group’s forecast demand for its crude will be 200,000 bpd less than the 27.2 million bpd expected next year. Petroleum exporting countries and affiliates known as OPEC + cut records in supply. The fall in demand due to the epidemic was supported in April. OPEC + will add an additional 500,000 barrels per day, reducing its supply restrictions in January. However, this is more than what is already planned to provide additional support to the market.
How much will the price rise in the next 1 months
Due to the increase in fuel demand at the global level and the introduction of a worldwide vaccination program, oil prices are rising. OPEC’s efforts to balance the oil market have yielded good results since March, along with a rise in oil prices. This expectation will have to continue in 2021 only when the expansion in oil prices will gain momentum. From a month’s perspective, the price of WTI crude (CMP: $ 47) can be $ 52 per barrel. While MCX Oil Futures (CMP: Rs 3452 / bbl) may move further towards Rs 3900 / bbl.
(Author: Prathamesh Mallya, AVP Research, Non-Agri Commodity and Currency, Angel Broking)