Americas News
Oil Prices Jump Over 2% As Analysts Sense A Market "Paradigm Shift"
In a repeat of last week's trading performance, oil prices on Monday enjoyed another round of substantial gains due to increasingly favourable market conditions as the Covid vaccines take hold and expectations that the $1.9 trillion U.S. pandemic aid package will be passed this month.
Brent rose $1.22, or 2.1 percent, to settle at $60.56 per barrel, while West Texas Intermediate rose $1.12, or 2 percent, to settle at $57.97 per barrel.
Phil Flynn, senior market analyst at Price Futures Group Inc., remarked, “There seems to be a paradigm shift in the market....a sense that the glut of oil supply is disappearing more rapidly than anybody thought possible.”
Indeed, on Monday the six-month Brent spread hit a high of $2.54, its widest since January of last year, and a signal of demand for current supply.
Paola Rodriguez Masiu, vice president for oil markets at Rystad Energy, said, "Managing to breach $60 again feels like the market is finally resurfacing after the long struggle......it offers a feeling of normality again.”
David D. Tawil, interim CEO of Centaurus Energy, pointed out that Brent and WTI have risen 59 percent and 54 percent respectively since early November when news of successful vaccines emerged, and he theorized that “By the summer, the vaccine should be widely provided and just in time for summer travel and I think things are going to go gangbusters.”
Tawil predicted prices of $70 to $80 per barrel for Brent by the end of 2021, and he added that “We are going to see some incredible oil prices over the next couple of years, incredibly hot.”
Amrita Sen, chief oil analyst at Energy Aspects, went a step further: she said "very easy monetary policy" could impact her firm's call for oil above $80 in 2022: "Maybe that is $100 now given how much liquidity there is in the system."
As for 2021, Sen said "the second half of the year looks much, much healthier in terms of demand."
That sentiment was echoed by Ed Morse, head of commodities research at Citigroup Inc.: "The recovery is proceeding at a faster rate than people perceived; the demand recovery is going to look stellar.
"The inventory draw is significantly greater than what many people thought."
Elsewhere on Monday, the mood was upbeat in Asia with all major indexes clocking gains, and eurostoxx futures and Germany’s DAX rose 0.7 percent each, while London’s FTSE futures added 0.6 percent - all predicated on the conviction that the Covid vaccines will bring about an economic revival more quickly than originally thought (for the record, in the U.S. alone new cases dropped below 100,000 for the first time since November).
