One year ago, crude oil prices plunged into the abyss, wiped out by the global coronavirus pandemic and disagreement within the Organisation of the Petroleum Exporting Countries (OPEC).
Twelve months on, prices have recovered and are rising, boosted by the global vaccination rollout and brightening optimism over demand.
Oil has returned to its pre-pandemic price, hovering around $65 a barrel, with predictions from Goldman Sachs it will rise above $80 in the coming months.
Strong indications are that demand will rise in countries where Covid jabs are moving apace, according to the US investment bank.
Rival group Morgan Stanley is predicting that crude prices will rise to $70 a barrel in the third quarter, adding to normal seasonal demand.
According to the International Energy Agency (IEA) in its latest forecast, the fundamentals of the oil market -- supply and demand -- are “stronger” and better balanced.
Even OPEC is more optimistic, and expects global demand for crude to rebound by six million barrels per day (bpd) in 2021 to 96.5 million bpd.
It’s a remarkable turnaround from 12 months ago, when the benchmark price for US crude plunged below zero dollars for the first time in history.
The market fell as low as -$40.32 on April 20, 2020 as investors were caught between a lack of buyers and an inability to take delivery of barrels due to lack of available storage space. In effect, they had to pay to get rid of the oil.
“A lot has changed since the negative price story,” said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, which specialises in online financial and trading services.
“Predictions have gone well ahead of themselves, many pointing at a deeper decline towards the negative $100-per-barrel mark,” she told AFP.
“But none of that happened, and look, a year after, many reports are now pointing at the positive $100-per-barrel level instead.”
In Britain, the government vaccination campaign is moving swiftly. As of Tuesday, more than 33 million people had received the first dose of a vaccine, and 10.4 million the second dose.
In the United States - the world’s biggest economy - where President Joe Biden has pushed through a massive stimulus package, more than half of adults or roughly 130 million people have had at least one shot of a vaccine.
That bodes well for crude demand because the US is the world’s biggest consumer of oil.
Published in The Express Tribune, April 22nd, 2021.
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