Global crude oil markets lost about a fifth of their value in 2020. Meanwhile, restrictions to curb the coronavirus pandemic and stimulus measures adopted by governments further crippled the global economy. Crude oil prices dropped sharply to their lowest level.
On the last trading day of 2020, Brent crude traded down 25 cents, or 0.5%, at $51.38 a barrel. West Texas Intermediate lost 0.2%, or 11 cents, to trade at $48. However, after the publication of inventory data in the United States, which has not shown a clear trend, it attracted buyers.
Since the beginning of the year, oil prices have dropped to their lowest levels. The first negative rate of the WTI in April, shocked global investors. However, since the decade lows in April, the black gold prices more than doubled.
Is crude oil still looking bullish?
The dollar ended 2020 with a downward spin on Thursday as investors pushed the global economy into riskier assets.
Analysts think that most of what we see in the market is marked by the US dollar collapse. They believe that this will continue for a long time because the new stimulus is being injected into the United States. Therefore, the market may not be reflecting a large increase in demand but a particular upward bias due to other different factors.
As for Brent oil, analysts think the price will have to begin to reflect the lack of demand. This leads to considering that breaking above $55 will be difficult, at least for now. At a fundamental level, the injection of fiscal stimulus in the United States will provide momentum to the market while sending the US dollar lower. However, the key will be to continue the momentum.
In the short term, worries about the Coronavirus holiday are likely to increase profits.
A new strain of the UK’s virus is pushing back restrictions, hurting short-term demand, and pushing up prices. Meanwhile, hospitalizations and infections have risen in parts of Europe and Africa.
In terms of supply, US energy companies added three oil and natural gas rigs this week.
At the January 4 meeting, OPEC Plus is expected to increase production to 500,000 barrels per day. OPEC producers seem optimistic about demand recovery in 2021. However, they believe that this action will not be immediate, and the improvement of the oil market will be gradual, taking more than six months.
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