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Citigroup said a few days ago that oil prices will return to $
60 a barrel by the end of 2021.
Speaking in an interview at the Asia-Pacific Oil Conference, Ed Morse, head of global commodity research at Citi, said: "We are definitely optimistic
.
The price increase is because the market is balanced, while the huge inventory is reduced
.
”
The pace of reduction in these inventories appears to have slowed
in recent weeks due to the stubbornness of the coronavirus and the fact that the OPEC+ alliance has begun to resume production.
That sent the price of global benchmark Brent crude down about 12 percent
so far this month.
Due to slow economic growth, global oil consumption will not recover to the 2019 level of 101 million barrels per day until the second half of 2021
.
Citi believes that global benchmark Brent crude is currently trading close to $40 a barrel and will average around $55 in 2021 before recovering to $
60 by the end of the year.
By then, West Texas Intermediate will recover to $
58.
However, commodities trading giant Trafigura Group expects crude inventories to build up by the end of the year due to weak demand, while the market "will get worse in the months from now"
.
Citibank, by contrast, expects Brent crude prices to climb to an average of $
48 a barrel in the fourth quarter.
For Citi, petrochemical feedstocks and gasoline will be the biggest growth drivers for the fuel, while jet fuel consumption is expected to make a comeback in 2024-2025
, Ed Morse said.
Ed Morse believes that Brent's rally above $60 may be short-lived, as higher prices will cause U.
S.
production to rebound
.
In addition, there are several unknown factors that may affect the market, including whether Iran's production will increase
significantly.
Citigroup said a few days ago that oil prices will return to $
60 a barrel by the end of 2021.
Speaking in an interview at the Asia-Pacific Oil Conference, Ed Morse, head of global commodity research at Citi, said: "We are definitely optimistic
.
The price increase is because the market is balanced, while the huge inventory is reduced
.
”
The pace of reduction in these inventories appears to have slowed
in recent weeks due to the stubbornness of the coronavirus and the fact that the OPEC+ alliance has begun to resume production.
That sent the price of global benchmark Brent crude down about 12 percent
so far this month.
Due to slow economic growth, global oil consumption will not recover to the 2019 level of 101 million barrels per day until the second half of 2021
.
Citi believes that global benchmark Brent crude is currently trading close to $40 a barrel and will average around $55 in 2021 before recovering to $
60 by the end of the year.
By then, West Texas Intermediate will recover to $
58.
However, commodities trading giant Trafigura Group expects crude inventories to build up by the end of the year due to weak demand, while the market "will get worse in the months from now"
.
Citibank, by contrast, expects Brent crude prices to climb to an average of $
48 a barrel in the fourth quarter.
For Citi, petrochemical feedstocks and gasoline will be the biggest growth drivers for the fuel, while jet fuel consumption is expected to make a comeback in 2024-2025
, Ed Morse said.
Ed Morse believes that Brent's rally above $60 may be short-lived, as higher prices will cause U.
S.
production to rebound
.
In addition, there are several unknown factors that may affect the market, including whether Iran's production will increase
significantly.
