Rystad Energy also predicts a crude shortage by 2050: File Image/Pixabay
Tuesday's crude trading activity was a virtual repeat of the previous session in which investors brushed aside lingering demand concerns and propelled the Brent and West Texas Intermediate benchmarks forward.
On the strength of the commencement of vaccinations in Britain, the U.S., and Canada, traders caused Brent to rise 41 cents to $50.70 per barrel, while WTI rose 63 cents to $47.62.
John Kilduff, founding partner at Again Capital, echoed the optimism building in the analytical community by stating, "The crude market continues to seize upon the future outlook of the post-pandemic period, which could be as soon as next summer... and a lot of us in the market sense the demand is lurking."
John Kilduff, founding partner, Again Capital
A lot of us in the market sense the demand is lurking
Differing slightly in outlook was Tamas Varga, analyst at PVM, who said, "There is a growing agreement between forecasting agencies that the improvement in global oil demand might not start at the beginning of next year but in the second half."
The International Energy Agency in its latest monthly report released Tuesday was of like mind: "The understandable euphoria around the start of vaccination programmes partly explains higher prices but it will be several months before we reach a critical mass of vaccinated, economically active people and thus see an impact on oil demand.
"In the meantime, the end of year holiday season will soon be upon us with the risk of another surge in COVID-19 cases and the possibility of yet more confinement measures."
Ironically, despite the unprecedented demand destruction caused by government-imposed lockdowns across the globe, Rystad Energy warned that the world will run out of the oil supplies it needs by 2050 unless a sharp rise in exploration occurs.
Wood Mackenzie added to this concern by stating, "Only about half the supply needed to 2040 is guaranteed from fields already onstream; the rest requires new capital investment and is up for grabs."
As for the current crude glut, at the IEA despite its cautious 2021 outlook conceded that it will likely clear by the end of next year, according to the agency's head of oil industry and markets Neil Atkinson.