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Two oil plugs
Johannes Eisele / AFP via Getty Images
Oil prices have risen this year and returned to higher on Friday – the tenth gain in 11 days.
In the long run, crude oil rose 0.7% to $ 61.54 a barrel. West Texas Intermediate, a US benchmark futures, rose 0.4% to $ 58.47 a barrel. Oil stocks were on a tear, with only one producer,
Western oil
(ticker: OXY), up 23% since the beginning of the month.
At these prices, some analysts have begun to warn that oil is a bubble that could appear. Oil demand is still extremely depressed compared to pre-Covid levels, and companies could start bringing supply back to the market if prices rise enough. The US Energy Information Administration has predicted that prices will start to fall as more offers are put on the market and that Brent prices will average $ 52 this year.
But a Citigroup analyst who has successfully predicted market movements ahead expects the bullish race to continue – and could lead to Brent Brent rising above $ 70 this year. Ed Morse, of Citi, said this week that the oil market is “gathering faster than expected”, with a remnant of stored oil that accumulated last year, emptying quickly. Morse predicted the collapse of oil in 2014, when many analysts expected strong prices to continue.
Citi expects oil storage levels to fall by about 4 million barrels a day in the first quarter and by 2.4 million in the second quarter. All that excess oil that remained unused in 2020 due to the pandemic will be used in the next few months, Citi projects.
“By the middle of the second quarter, we project that observable global stocks will fall within the five-year pre-pandemic period of 55-60 days of anticipated demand coverage,” Citi analysts, including Morse, wrote in a statement. a report released Wednesday.
Analysts see Brent averaging $ 64 a barrel this year. However, by 2022, oil producers are expected to start pumping more, resulting in a slight drop in prices. Their average price in 2022 is 58 USD.
Other analysts also have alcohol forecasts for oil. Francisco Blanch of Bank of America wrote on Thursday that oil demand could return strong in the next three years, defying expectations for a peak in short-term demand.
“Looking at the next three years, we see a window of strong growth in oil demand in the future,” he wrote. “Much of the growth is expected to be head-on in 2021, with consumption set to grow by 5.3 million barrels per day this year, followed by an increase of 2.8 million next year and 1.4 million in 2023 If our expectations are met, this would be the fastest 3-year growth rate in the 1970s in absolute volumes. ”
Blanch expects the peak to come around 2030, as sales of electric vehicles will increase.
Write to Avi Salzman at [email protected]