Oil set for 20% drop in 2020 as lockdowns weigh

Survey shows oil prices are not expected to make much progress in 2021

KARACHI:

Global crude oil markets have lost about a fifth of their value in 2020 as strict coronavirus lockdowns paralysed much of the global economy, but prices have rebounded strongly from their lows as governments rolled out stimulus.

On Thursday, the last trading day of 2020, Brent was down $0.55, or 1%, at $51.08 a barrel as of 1315 GMT, while US West Texas Intermediate lost $0.44, or 0.9%, to $47.96 a barrel.

Brent and WTI have more than doubled from the decade lows seen in April, recovering from a year in which WTI prices fell into negative territory for the first time, sending shockwaves across the market.

A monthly Reuters’ poll on Thursday showed oil prices are not expected to make much progress in 2021.

“New virus strains might complicate the outlook and lead to harsher lockdowns that will cripple the crude demand outlook for the first quarter,” said Edward Moya from Oanda.

Asian shares edged up on Thursday and were set to end a tumultuous 2020 at record highs.

The dollar was ending the year in a downward spiral, with investors putting more money into riskier assets and as the United States printed more money to fund its swelling budget and trade deficits.

Global commodity markets were set to end 2020 on a strong note, with recovering demand and widespread stimulus packages buoying prices.

Rollouts of vaccines to combat the virus and trillions of dollars’ worth of fiscal support are expected to boost investment and spending in 2021.

In the short term, concerns over coronavirus lockdowns are likely to cap gains.

A new variant of the virus in Britain has led to the reimposition of restrictions on movements, hitting near-term oil demand and weighing on prices, while hospitalisations and infections have surged in parts of Europe and Africa.

The next major oil price driver will be a January 4 meeting of the Organisation of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, which will debate boosting output from February.