Will oil prices reach $80 a barrel this summer?

According to a report from today’s oil prices on May 5, India, the world’s third-largest oil importer, is the hotspot of the recent new crown pneumonia epidemic.

OPEC+ intervened in the oil market from the supply side out of its own needs.

This puts even greater pressure on OPEC+, and the organization is required to perform its duties to make the oil industry meet market expectations.

But the question is not whether the market will improve, the question is how quickly it will improve and where the recovery will peak.

Travel restrictions in Europe have brought another unknown factor to oil prices.

In the United States, the number of new coronary pneumonia cases is also decreasing, and the number of vaccinated people is increasing.

But this is not to say that all analysts agree that these factors will have specific effects on oil demand, let alone have any specific effects on oil prices.

As of April 6, EIA expects global oil demand this year to be 97.

　　Just a week ago, Rystad Energy adjusted its April oil demand to a daily reduction of nearly 600,000 barrels.

　　But not everyone is so pessimistic.

　　Rystad analyst Louise Dickson said that whether India is in trouble or not, oil demand will still increase by 3 million barrels per day from now to the end of June.

　　UBS believes that the launch of the vaccine is a major piece of good news for the petroleum industry.

　　Moody's also holds a very positive view on the timing of the rebound in oil prices, believing that pent-up consumer demand will promote the recovery of the global economy.

　　Although the prospects of the oil industry may still be uncertain, the current trend is certain that oil inventories are expected to decline, which is a sign of increasing oil demand, and OPEC+ will continue to limit production.

　　The outbreak in India will not prevent oil prices from recovering, but it is likely to slow the recovery until the second half of this year, or even early to mid-year next year.

　　If this is the case, it will take a long time for OPEC+ member states to continue to restrict production, and at the same time, demand will slowly recover.

　　Wang Jiajing excerpted and translated from today's oil prices

　　The original text is as follows:

　　Will Oil Hit $80 This Summer?

　　India, the world's third-largest oil importer, is the latest coronavirus hotspot.
It has recently hit a record-breaking number of new daily coronavirus cases—a statistic that dented oil demand and pressured oil prices.

　　OPEC+, out of its own necessity, has intervened in the oil market on the supply side of the equation to offset the pandemic-depressed oil demand.
And despite the group's relative success at curbing oil production to prevent excess oil inventories from ballooning before the market fully recovers, India's booming case counts have prevented oil prices from a quicker recovery.

　　This has put even more pressure on OPEC+ to perform to meet market expectations.
But there is no doubt a shift in the momentum of the oil markets.
Indeed, oil prices have recovered somewhat in recent months, and the overwhelming majority of oil experts and analysts think this trend will continue.

　　The question isn't whether the market will improve.
The question is how quickly will it improve, and where will that recovery peak.

　　Lockdowns in Europe add another unknown element into the oil price mix.
A month ago, Europe renewed many of its lockdown restrictions, delaying the oil price recovery.
But now, as India is in the midst of its worst COVID-19 surge since the pandemic began, Europe is getting ready to lift those lockdowns.
EU officials have submitted this week a proposal to ease summer travel restrictions to its 27 nations.
This will increase the demand for jet fuel—a critical component of crude demand.

　　In the United States, Covid-19 cases are also shrinking while the number of vaccinated grows.
As a result, several US states, including New York, are relaxing restrictions.
All of this will have a profound effect on the price of crude oil.

　　But that's not to say that all analysts agree on what this will do to oil demand, let alone what effect it will have on oil prices.

　　The IEA, for starters, revised up its oil demand outlook for this year on April 14.
By its estimates, oil demand will now increase by 5.
7 million bpd this year, reaching 96.
7 million bpd.
The reason for this upward revision was due to increases in the IEA's oil demand forecast for the two largest oil importers in the world.

　　As of April 6, the EIA saw global oil demand at 97.
7 million bpd this year.
Compared to Brent prices that were near $65 per barrel in March, the EIA sees not much movement in the price of Brent, estimating $65/barrel in Q2 2021 , $61 per barrel in H2 2021, and even worse--$60 per barrel in 2022.

　　Not even a week ago, Rystad Energy adjusted its oil demand for April down by almost 600,000 bpd.
For the month of May, it revised it down by 914,000 bpd, citing India's demand problems as a result of the pandemic—a situation that would no doubt result in a new inventory glut.

　　But not everyone is so pessimistic.
Goldman Sachs sees things as much rosier, with oil reaching as much as $80 this summer.
Its rationale for this positive outlook on oil prices is simple.
“The magnitude of the coming change in the volume of demand— a change which supply cannot match—must not be understated.
"

　　Rystad analyst Louise Dickson said that oil demand should still increase by 3 million bpd between now and the end of June, India troubles or no.
According to her, oil prices should make their way back to $70 per barrel in the coming months.

　　UBS sees vaccine rollouts as a major positive for the oil industry.
As people return to normal activities and businesses fully reopen, oil demand will cause Brent to increase to $75 per barrel in H2, according to analyst Giovanni Staunovo.

　　Moody's has a rather positive view of the timing of an oil price rebound as well, citing pent-up consumer demand that will propel forward a global economic recovery.
But their medium-term price range is still capped at $65 per barrel.
Moody's sees this economic recovery as hastening a rebound in oil demand through the end of this year and the beginning of next year.

　　The outlook may be uncertain, but the current trend is definitely one of drawing down oil stocks—a sign of increased oil demand while OPEC+ continues to restrict output.
In the highly visible US oil market, for example, commercial crude inventories have finally retreated back to the five-year average for this time of year at 493 million barrels.

　　India's virus explosion will not prevent an oil price recovery.
But it very likely that it will slow the recovery well into the second half of this year or even the beginning to middle of next year.

　　If that turns out to be the case, that's a long time for OPEC+ members to continue their output restrictions while demand takes its sweet time recovering.