Industry analysts and economists remain bullish on oil prices in 2021

By Rahul Vaimal, Associate Editor
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While a monthly poll conducted among trade analysts and economists projects the Brent Crude prices to hover around $50.67 a barrel in 2021, lower than the prices at which the commodity traded early on the last trading day of 2020, leading financial services firm Goldman Sachs remains bullish about the Crude oil prices and expects the prices to remain around $65.00 a barrel in the new year. 

With the crucial OPEC+ gathering happening just hours later, the global investment institution expects mass vaccinations and the limited increase in oil production from the global crude oil producer’s body to keep the prices higher.

Mr. Jeffrey Currie, Goldman Sachs’s Global Head of Commodities Research in the Global Investment Research Division opined that declining oil inventories due to strengthening demand from Asia has improved optimism about oil prices into the new year.

An international oil economist and a Professor of Energy Economics at ESCP Europe Business School, UK, Mr. Mamdouh Salameh expects the prices to outdo Goldman Sachs’s projections and remain within the $65-$70 range in 2021.

Mr. Salameh has built his estimates on several optimistic factors including the possibility of having a global economic growth of 5.4 percent in the year compared to 3.3 percent in 2019 driven by China and India.

“The underinvestment in oil and gas will put upward pressure on oil prices. At the height of the pandemic, oil and gas investments estimated at $131 billion that was slated to be approved in 2020 were shelved, some indefinitely. This could push oil prices to between $80 and $100 by 2024,” Mr. Salameh remarked.

Another major factor behind Mr. Salameh’s outlook is the OPEC+’s expected production cuts until the end of the first quarter of 2021 which will make US shale oil nearly impossible to come back soon and complete with traditional oil producers.

With the impending gathering of OPEC+, Commerzbank analyst Carsten Fritsch observes that “If OPEC+ loosens the production cuts too quickly, there is a threat of a price setback. But if it is too cautious, a rift could arise and US shale oil production could rise again.”