But Wood Mackenzie warns that oil could plunge to $10 by 2050: File Image/Pixabay
Although the gains were minimal compared to the previous session's almost 5 percent rise, crude prices on Thursday closed at their highest for two key benchmarks since March 17 - again due to strong demand data spurred by the worldwide Covid vaccination rollout.
After it was learned that U.S. retail sales rebounded more than expected in March as Americans received additional pandemic relief checks and as the vaccinations kicked in, Brent rose 36 cents to settle at $66.94 per barrel, and West Texas Intermediate rose 31 cents to settle at $63.46.
Prices were also supported by the U.S. dollar on track to fall to a four-week low against a basket of currencies, as well as by a Goldman Sachs report suggesting that oil may break out of its recent range: "We remain positive on Brent oil forecasting $80 [per barrel in the third quarter] on a near-term demand recovery and supply discipline," the bank stated.
Bjornar Tonhaugen, head of oil markets, Rystad Energy
The market is holding on to these gains, only cutting down on the froth
Bjornar Tonhaugen, head of oil markets at Rystad Energy, noted that while Wednesday's gains were a bit excessive, "they were built on valid grounds, as several high-profile reports forecast demand growth for the second part of the year and as crude stocks in the U.S. surprised traders with quite significant draws.
"Today the market is holding on to these gains, only cutting down on the froth from this week's enthusiasm."
John Kemp, commodities analyst at Reuters, painted a guardedly optimistic picture of how the oil market will play out for the remainder of this year: he said it is "likely to remain adequately supplied for the remainder of the year if prices stay around $65 per barrel, which would be very close to the long-term average over the last two or three decades in real terms."
He added that "Prices at this level would continue to encourage a modest increase in drilling by shale firms and a rise in production through the rest of 2021 and into early 2022......but U.S. output increases would likely remain gradual and should be absorbed by the return of consumption as the epidemic passes and travel controls are relaxed."
By contrast, Wood Mackenzie painted a long term picture of the oil market on Thursday, by stating in a report that if the world succeeds in electrifying the energy market and meeting Paris Agreement goals, oil could plunge to as little as $10 per barrel by 2050.
The report added that demand for oil would start to fall from 2023 and the decline would quickly accelerate, with year-on-year falls of around 2 million barrels per day.