In the past 2020, due to the epidemic crisis and the imbalance between supply and demand, international oil prices once fell into the negative range, and then rebounded with shock, and finally climbed back to around US$50 at the end of the year.
How will international oil prices go in the new year? In HSBC’s view, everything still depends on the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
In a research report on Thursday, January 14, the team of Gordon Gray, HSBC’s global head of oil and gas equity research, said that if OPEC+ can maintain cohesion while restoring production, this may have a negative impact on international crude oil prices. Prospects are key.
HSBC sees that at the beginning of the new year in 2021, there is unusually high uncertainty in the outlook for the global crude oil market, and the path for demand recovery is still very unclear.
In this context, HSBC believes that the main driver of international oil prices is how OPEC+ can achieve higher production this year.
So far, OPEC’s core members are cautious about continuing to increase market supply. If this attitude can be maintained, HSBC believes that this will lay the foundation for a steady reduction in global crude oil inventories and the health of the oil market this year.
From the demand side, HSBC predicts that demand is likely to be weak in the first quarter of this year due to normal seasonal effects combined with a new round of blockade measures.
However, favorable seasonal factors and continued potential economic recovery may increase crude oil demand for the whole year by 5 million to 6 million barrels per day compared with the same period last year. Among them, demand in the second half of the year may be higher than that in the first half. Output 5 million barrels/day.
On the supply side, OPEC+ is expected to continue to maintain tight market supply. Among them, Saudi Arabia voluntarily reduced production by 1 million barrels per day in the previously finalized production reduction agreement, which should help prevent oil supply from becoming oversupplied again in the short term.
However, HSBC believes that by the second half of the year, OPEC+’s average daily production may be 4 million barrels higher than the current level. But despite this, HSBC still expects the full-year supply gap to be about 1.4 million barrels per day, which means that global excess inventories will be significantly reduced.
It is worth noting that in the process of OPEC+ increasing production, there may be more and more frictions between various member countries, and the cohesion of the group There will also be a reduction, and some OPEC or non-OPEC oil-producing countries may push up supply levels faster than countries such as Saudi Arabia.
Taken together, HSBC raised its Brent crude oil price forecast in 2021 from US$50/barrel to US$52/barrel, but its price forecast for Brent oil in 2022 remained at US$60. The level of /bucket remains unchanged.
HSBC also said that if OPEC+ can successfully achieve higher production and all member countries remain consistent in complying with the agreement, the above-mentioned forecast prices for 2021 will have upward risks, that is, there is still room for international oil prices to rise. .
What is OPEC’s attitude?
The latest monthly report data released on Thursday showed that even if it restored some of the previously reduced output this month, OPEC, which is committed to reducing the world’s huge oil inventories, still supplies less than need.
Last week, Saudi Arabia, the largest oil producer in OPEC, announced a surprising additional production cut plan, which may further deplete oil inventories in the next two months.
OPEC kept its annual supply and demand forecast for 2021 unchanged, but said supply and demand conditions in the first quarter would be tighter than previously estimated due to increased consumption and slower production from non-OPEC oil-producing countries.
Accelerating demand means oil inventories may decline faster in the second and third quarters, depending on what output policy OPEC and its allies choose.
OPEC Secretary-General Mohammad Barkindo said on Wednesday that the main priority of the organization and its allies is to reduce the “very high” inventories caused by the epidemic that has severely hit fuel demand. Barkindo said: Our focus is on how to assist the market in accelerating the clearance of inventories so that the market can return to balance.
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