Graphic: Oil price estimates for 2021,
Graphic: Oil and coronavirus cases,
Of the 32 respondents who participated in both the January and December polls, 28 raised their forecasts, painting a slightly more optimistic picture.
An uptick in economic and travel activity fueled by COVID-19 vaccines could accelerate in the second half, analysts said, but the recovery will take time.
“It’s time to take a breather now, as demand will stay low in the near future because of the ongoing lockdowns,” LBBW analyst Frank Schallenberger said.
The emergence of new virus strains, renewed lockdowns and logistical hurdles facing vaccine roll-outs also prompted the International Energy Agency to lower its 2021 demand outlook.
In response to the demand threat, Saudi Arabia has pledged additional output cuts of one million barrels per day in February and March, while most OPEC+ producers will hold production steady during new lockdowns.
“We expect OPEC+ to gradually lift production in April-May in line with rising demand, but to keep the overall quota system in place until early 2022,” Economist Intelligence Unit analyst Cailin Birch said, adding demand should recover to 2019 levels in 2023.
The poll forecast U.S. crude to average $51.42 per barrel in 2021 versus December’s $47.45 consensus.
“In the near term, we expect U.S. shale producers to maintain a prudent approach and only more strongly react to higher prices once the vaccine uptake supports higher and sustained demand,” said UBS analyst Giovanni Staunovo. [RIG/U]
Supply could rise further if the new Joe Biden-led administration in Washington decides to lift or ease sanctions on Iran, analysts added.
Graphic: OPEC and U.S. oil production,
Reporting by K. Sathya Narayanan and Bharat Govind Gautam in Bengaluru; Editing by Arpan Varghese, Noah Browning and Jan Harvey