Oil price outlook in 2021: encouraging signs of a stable recovery

 

oil price outlook 2021

Oil price recovery continued on Monday when markets opened for business after a very quiet Christmas.

Despite the absence of usual Boxing Day sales and corresponding gloom in the retail sector, oil price rally continues defying some analysts and the forecasts on the same wavelength.

The markets may have got a boost from President Trump’s approval of the Coronavirus air package that had been a bone of contention between the two major political camps in the US.

In addition, the news that the European countries are about to embark on an ambitious vaccination drive, may have boosted the sentiment in the oil market too.

A new variant of the Coronavirus, meanwhile, has emerged in South Korea, leaving the scientists in the medical field in yet another lurch while adding more stumbling blocks in their path to find a solution.

South Korea is a country that managed the first two waves well, becoming the envy of the world for the sheer efficiency and planning; it’s a country with strict Coronavirus screening procedures in place. Yet, the country reported a new variant at the weekend.

The efficiency of the few vaccines that make headlines everyday remains to be seen in the presence of new variants of the virus. The data, meanwhile, suggests a less lethal form than what we saw in the spring, despite the higher infection rates.

Oil and gas investors feel that the demand for fossil fuel will gradually recover when motorists are back on roads even if it is New Normal for a few more months.

They are fully aware of the dip in demand for the aviation fuel for a longer period, even if we come out of the pandemic next year.

That will recover too at some point, when travellers pluck up the courage to take the diminishing risk in the coming months, when the virus becomes less and less dangerous as it evolves.

All in all, the oil price recovery is a good thing, both for producers and investors – in the long run.

As oil companies take green issues seriously, they will play a more constructive role in tackling the environmental issues, as they can afford to invest in more research in proportion to an increase in revenues.

 

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