Even though the oil and natural gas market remains volatile due to the adverse effects of Covid-19, oil prices are likely to reach $75 each barrel before 2021 ends, according to media reports. It was also reported that oil demand rose by 3.8 million barrels per day in June, which is three times more than usual.
Swiss bank UBS told the media, “We anticipate Brent crude will rise to $75 a barrel by December. That should benefit global energy stocks, which… are still pricing in a Brent crude price of only $55-$60.” After enjoying a good period of incline, oil prices fell 45 cents and stood at$71.80 a barrel. Additionally, there have also been concerns regarding newly-placed restrictions to contain the spread of Covid-19 and that also poses a threat to dampen the economic recovery and lower the demand for oil globally.
UBS also mentioned that oil prices will continue to remain volatile, but the results that we saw in June will also come back. The global trend towards normalising our economy still continues, and that should be an important factor to boost oil demand.
The increase in oil demand in June indicated that its primarily because of eased restrictions in North America and Europe, along with India where oil demand recovered swiftly after the restrictions were lifted in May.
Since the recent agreement between Organisation of Petroleum Exporting Countries (OPEC) and its allies to lift production each month by 400,000 barrels per day has not been finalised yet, Saudi Energy Minister Prince Abdulaziz bin Salman has made it clear that this can be delayed or reversed if it’s necessary.