Meanwhile, insiders predict when oil demand will ultimately plateau: File Image/PixaBay
Despite mixed prices on Friday, crude posted a fourth consecutive week of gains as traders fortified by the Covid vaccine breakthroughs anticipated that the Organization of the Petroleum Exporting Countries (OPEC) will delay its plan in 2021 to increase output.
The cartel will meet on Monday to discuss the issue, which involves raising output by 2 million barrels per day (bpd) in January.
Brent on Friday rose 38 cents to settle at $48.18 per barrel, while West Texas Intermediate fell 18 cents to settle at $45.53 per barrel; for the week, the former rose 7.2 percent and the latter 8 percent.
Erduan Reid, head of crude swaps, Eagle Commodities
A material recovery in economic activity and oil consumption in the next six months is on the horizon
Although analysts in the wake of the vaccine news have been predicting extremely strong demand recovery for 2021, JP Morgan on Friday struck a more sombre note by stating, "While a successful vaccine roll out should break the link between infection and mobility, even then global oil demand will likely only reach its pre-pandemic run rate by mid-2022."
Still, Erduan Reid, head of crude swaps at Eagle Commodities, summarized the sentiment of many of his colleagues by remarking, "With three vaccine candidates at least close to deployment, a material recovery in economic activity and oil consumption in the next six months is on the horizon.
"Most balance estimates assume a first-quarter 2021 global draw driven by Asia, even if Europe and the U.S. build on mobility restrictions."
More good news on Friday came in the form of signs that consumption is gradually improving other than in Asian countries: the U.S. Transportation Security Administration reported that foot traffic in American airports hit the highest since March before the Thanksgiving holiday, though it remains about 1.5 million people lower year-over-year.
Meanwhile, oil majors on Friday took time out from coping with a decimated market to predict when oil demand will ultimately peak due to renewables, electric cars, and other factors; the International Energy Agency said peak demand is already a reality in advanced economies but will be offset by a rise of 9 million bpd in developing economies between 2019-2030.
OPEC speculated that demand will recover in the next two years but plateau by 2040, while Goldman Sachs stated, "We do not expect global oil demand to peak before 2030 in our base case driven by solid fundamental economic growth, emerging market demographics and relatively low oil prices."