Oil Price Forecast 2020 - 2021

Posted in News

What are oil price forecast and what can move WTI and Brent price in 2021?

There is a lot of expectation for a quick global economic recovery but is this supported by real fundamental reasons or more linked to expectations for continued interventions by the Fed and the ECB? This is probably the real question surrounding stock markets as well as the oil market. The WTI oil price has recovered the threshold of $40 after falling negative – for a couple of hours only – on the 20th of April. This only involved the May expiry of WTI, due to a temporary and extraordinary situation in which all tanks and stocking structures were completely full in Cushing, Oklahoma, where many oil pipelines converge.

Forecast for Oil Price

What can we now expect from the price for the final part of 2020 and for 2021? For sure we have a weaker market compared to the pre-pandemic situation, even if it seems that OPEC+’s intervention and central banks' quick reactions has managed to lift the price up again.

The biggest risk is linked to the possibility of a second wave of the virus and particularly to further closures of economy, which could generate temporary collapses of economies reducing movement of people and fuel demand from the car and airplane sectors. Moreover, in the face of a global recession oil demand will decline, with consequent effects on the price of the barrel. This is definitely another significant risk for the final parto of 202 and also for 2021, as the oversupply scenario seen in recent months could re-emerge if economies slow down.

How can OPEC move WTI price?

Another element to be considered is the agreement between OPEC+ countries, which is a crucial support to the price also in 2021. Moreover, it will also be very interesting to see the reaction of US producers and the percentage of structures which can survive a sustained low-price environment (and of course, the intervention of the US Government to sustain them). In a few words, investors are betting on a quick recovery, but risks for a new decline of oil price remain and could be just around the corner.

Oil Price Chart (WTI  - ActivTrader Platform)

Oil Price Chart