Commodities appear to have begun a new supercycle that will last for years as Wall Street bets on a strong economic recovery from the epidemic, analysts at JPMorgan Chase said in a report last week. JPMorgan’s Marek said oil prices could rise “significantly.” Companies from Goldman Sachs Group Inc. to Bank of America Corp. to Ospraie Management LLC are betting on a bull run in commodities as government stimulus begins to take effect and markets around the world Vaccines are being deployed to combat the coronavirus. That optimism has driven hedge fund long bets on the commodity to its highest level in a decade. This week, U.S. crude oil once exceeded the $60 mark. On Wednesday (February 17), oil prices fluctuated and fell back below $60.
Driven by the stimulus plan, the two major investment banks believe that oil has entered a “super cycle”
JPMorgan analysts said in the report: “We believe that the new A cycle of rising commodity prices, especially oil prices, has begun. The trends in yields and inflation are reversing.” JPMorgan Chase believes that the driving factors for the latest economic cycle include post-epidemic recovery, ultra-loose monetary and fiscal policies , a weaker U.S. dollar, rising inflation and more proactive environmental policies around the world.
JP Morgan predicts that international crude oil prices will rise to US$100 per barrel. This is a level not reached since 2014. This expectation is based on the fact that fiscal stimulus plans will boost consumption, but the oil industry has withdrawn investment in expanding new production. This disconnect between supply and demand drives continued price surges and is the basic condition for a so-called super cycle.
Chrisstyan Malek, head of oil and gas at JPMorgan Chase, said last week: “We will have an oil shortage in the next few years before we no longer need oil. Oil prices may exceed 100 per barrel. dollar, or even higher.” Goldman Sachs analyst Curry said that since the stimulus package is mainly targeted at low- and middle-income households, this stimulus package will create “significant commodity-intensive consumption.” Currie explained: “These people don’t drive Teslas, they drive SUVs.”
Some analysts still have reservations about the recovery of demand, and the fate of oil prices depends on OPEC
On the other hand, oil analyst Arjun Murti believes that talk of a super cycle may be a bit hasty. Before the epidemic, global oil demand was about 100 million barrels per day. In 2020, that number dropped to an average of about 90 million barrels per day. Murthy predicted that vaccinations are not expected to allow long-distance air travel to resume on a large scale until 2022, and oil demand is unlikely to reach pre-pandemic levels before then.
Increased production may become a major obstacle for bulls. Crude oil supplies have taken a hit during the crisis, with U.S. production falling by about 2 million barrels per day in 2020 as oil prices fell. Production cuts by Saudi Arabia, the United Arab Emirates and other OPEC+ members have created about 8 million barrels per day of spare capacity.
Patrick Gibson, global head of oil supply at consulting firm Wood Mackenzie, said: “There is no real oil shortage in the short term and we are seeing countries such as the United Arab Emirates planning to increase production capacity. However, in the oil industry, overall It is difficult to determine the arrival of supply at the right point in time.”
Analyst Pierre Andurand said: “The trend of oil prices in 2021 is largely in the hands of OPEC, depending on their choice How much supply will be released to the market. I think the trend of oil prices in the next few years may be upward, but there are also many elements that may undermine its rise, including the pace of the return of Iranian oil, increased supply, and the further spread of mutant strains of COVID-19. .”
Curie believes that demand growth may begin to level off as early as 2025. Analysts at JPMorgan believe this super cycle will last nearly a decade. This week, U.S. crude oil once exceeded the $60 mark. On Wednesday (February 17), oil prices fluctuated and fell back below $60. (Source: Huitong.com)
According to foreign news on February 17, Saudi Oil Minister Abdulaziz bin Salman said on Wednesday that it is too early to declare victory over the new coronavirus epidemic and oil producers must be “extremely cautious.”
He said when participating in a conference, “The current environment we are in has changed from a year ago, but I must warn, warn again: We cannot be complacent. The current market The uncertainty is still very high, and we must be extremely cautious.”
“I hope oil traders will not try to predict the movements of OPEC+, and do not try to predict unforeseen things.”
He also said that he would not send a signal for future OPEC+ oil production cuts. </p
