Dubai: Global crude prices have stayed firmly above $50 as traders and investors were encouraged by progress made in COVID-19 vaccine approvals and rollouts. And there’s more good news coming their way.
Brent crude was trading at $52.26, its highest since March. Meanwhile, US crude prices were up 1.5 per cent at $49.08, reaching levels only seen before in February.
“Overall it has been another good week for oil, which seems able to go into the Christmas week with yet another coat of weekly gains,” said Bjornar Tonhaugen, Rystad Energy’s Head of Oil Markets.
“Market euphoria has not stopped really, as more vaccine news are anticipated in coming weeks, more approvals, wider campaign rollouts and these are all music to the traders’ ears,” he added.
Oil prices could get a boost once US congressional leaders push through a stimulus package to revive the domestic economy.
“A US stimulus package and Brexit deal could give crude prices one final bump at which point a lot of good news is priced in, while near-term downside risks seem underpriced,” said Craig Erlam, Senior Market Analyst, OANDA Europe.
“We could see a lot of profit taking in the short-term as crude closes in on that resistance zone,” Erlam added.
Although Rystad’s estimates support higher prices in the second-quarter of 2021, getting through the next few months would be hard.
“Vaccine roll-outs in the US and elsewhere do not immediately allow governments to open up economies and borders,” said Rystad’s Tonhaugen.
The Norway-based energy consultancy expects lockdowns introduced in the US and Europe to spill over into the first-quarter of 2021.
But these short-term hiccups aside, the market is definitely going further into bullish territory.
“All in all, we see oil demand and supply moving back into balance in 2021,” said Jean-Pierre Durante, Head of Applied Research, Pictet Wealth Management.
“While abundant production capacity means that upside price potential could be limited, our central scenario is for the Brent oil price to increase to about $55 per barrel at end-2021 compared with about $50 today,” Durante said.