OPEC cuts, vaccines to sustain oil's recovery: Reuters poll
- Wall Street closes lower as virus spike hits travel stocks
- Netflix (NFLX) Tops Q1 EPS by 78c, Subs Miss
- Kansas City Southern (KSU) Soars as Bidding War Brews After Canadian National Railway (CNI) Makes a $33.7 Billion Offer
- Analysts Positive, Raise PTs as IBM (IBM) Tops Market Estimates and Reaffirms Guidance
- Boeing (BA) Down 3% After CFO - Aged 54 - Retires, Seen as an 'Odd' Move
FILE PHOTO: A 3D printed oil pump jack is seen in front of displayed stock graph and Opec logo in this illustration picture, April 14, 2020. REUTERS/Dado Ruvic/Illustration/File Photo
Get instant alerts when news breaks on your stocks. Claim your 1-week free trial to StreetInsider Premium here.
By Nakul Iyer
(Reuters) - Oil prices will stabilise above $60 a barrel level this year, as vaccine rollouts support a demand recovery and OPEC and its allies continue to rein in supply, a Reuters poll showed on Wednesday.
The survey of 48 participants forecast Brent would average $63.12 per barrel in 2021, up from last month's consensus of $59.07 and the average price so far this year of $59.36.
The benchmark was trading close to $64 on Wednesday.
"With vaccinations expected to gain pace and OPEC+ likely to keep to a cautious approach — reducing production cuts when demand recovers — we expect oil inventories to normalise by mid-year, which should support prices," said UBS analyst Giovanni Staunovo.
Oil demand was seen growing by 5 million-7 million barrels per day (bpd) this year, despite renewed COVID-19 lockdowns in Europe.
Graphic: Oil's road to recovery - https://graphics.reuters.com/OIL-PRICES/gjnpwodalpw/chart.png
Edward Moya, senior market analyst at OANDA, said the U.S. economy was recovering fast, driving global demand for oil higher despite a faltering outlook in Europe.
Central to the price recovery thesis are expectations that the Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, will extend output cuts that now run into April and only modestly raise output after that.
Marshall Steeves, energy markets analyst at IEG Vantage, said $60 could prove pivotal, as above that level U.S. shale oil becomes more economical, prompting more production and putting U.S. crude back in competition with OPEC+ for market share.
Saudi Arabia could start raising output at prices above $70, but by that point U.S. output was already likely to be rising, as listed shale firms seek to boost financial returns, he said.
Graphic: U.S. oil rig count climbs to an over 10-month peak - https://graphics.reuters.com/OIL-PRICES/xklvyrynwpg/chart.png
Plans by Indian state refiners to reduce their reliance on Saudi crude poses a further test for the kingdom, which has made voluntary production cuts in addition to its OPEC+ reductions.
Sources said the refiners planned to cut Saudi oil imports by about a quarter in May.
In addition, Intesa Sanpaolo analyst Daniela Corsini said: "High prices could stimulate output growth, and incentivise cheating from OPEC+" on agreed quotas.
Also, Washington could proceed with talks with Iran for a new nuclear deal. "Therefore, it's possible that Iranian exports will increase toward end-2021," she said.
(Reporting by Nakul Iyer in Bengaluru; Editing by Arpan Varghese and Edmund Blair)
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- API crude rose 0.44 million barrels, versus an expected draw of 3 million barrels
- Toronto area to close some workplaces amid COVID-19 surge
- Japan's foreign residents ponder travelling for vaccines amid slow inoculation push
Create E-mail Alert Related CategoriesCommodities, Reuters
Related EntitiesUBS, Oil Inventories, Crude Oil, OPEC
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!