In the latest monthly reports, the IEA, EIA and OPEC have raised their forecasts for oil demand in 2021. However, their predictions are highly dependent on the wider spread of Covid-19 vaccines than they are now, as well as their effectiveness against the strains that have triggered a second or even third wave of disease in some countries.
Given the delays in vaccines, new strains of the virus and the problems associated with air travel, does this mean that there is no reason to be particularly optimistic about a rebound in oil demand yet? The Fortrader issue was commented on by Dmitry Alexandrov, Head of the Analytical Research Department of UNIVER Capital LLC.
– There are really a lot of questions about the dynamics of demand. At the same time, we see that the dynamics of stocks shows their reduction and return to the historical average range, which removes the overhang of supply in the market. Now it is important that there is no too rapid increase in production either from OPEC + or from other players.
At the same time, we see that oil prices (and not only oil) are quite resilient to the negative news background (for example, the latest reports on the deterioration of the pandemic picture in India). This indicates that expectations for the development of a new commodity cycle against the backdrop of continued stimulus in the main economies (and primarily in the United States) remain bullish and optimistic in the medium term. So from the point of view of the influence of the supply / demand balance on the price, the situation looks moderately favorable.