Analyzing the recent movements of oil prices, most experts predict a promising future for this commodity. However, the forecast is likely to encourage oil producers rather than its consumers.
The US Energy Information Administration (EIA) expects that in the first quarter of the year, Brent crude will trade at the level of $56 per barrel on average. However, by the end of the year, the price may drop to $52 per barrel. “Brent crude oil prices settled at more than $55/b on all but one day since January 8, marking the highest levels since the early days of the pandemic in late-February 2020. However, new government mobility restrictions in response to COVID-19 during the Lunar New Year holiday season in China and increased restrictions on travel in Europe both present the potential to keep petroleum demand lower than might otherwise be expected”, the EIA report reads.
In general, the oil market began the year on a positive note. In January, Brent crude spot prices settled at $55 per barrel, $5 higher than the average reading in December. Moreover, the announcement made by Saudi Arabia has also boosted the market. “Saudi Arabia announced on January 5 that it would unilaterally cut an additional 1.0 million barrels per day (b/d) of production in February and March,” the report unveils.
