Meanwhile, China is poised to become the world's largest oil refiner: File Iamge/Pixabay
Oil prices made a strong comeback on Monday-to the tune of over 3 percent–as optimism about the efficacy of the Covid vaccination programs combined with a reduction in Covid deaths in India galvanized traders.
Trading was also buoyed by what many analysts were insisting last week: that despite hyperbole from Iran, a new deal between the Islamic republic and the U.S. is less likely than it initially seemed; as a result, Brent on Monday settled up $2.02, or 3 percent, at $68.46 per barrel, while West Texas Intermediate ended at $66.05 per barrel, up $2.47, or 3.9 percent.
Stephen Brennock, analyst at PVM, pointed out that even if Iran pumped large volumes of crude into the global market, they would "be absorbed by the market as a result of a vaccine-spurred surge in demand over the coming months."
We estimate that Brent prices would still reach $80 per barrel
Goldman Sachs contributed to the bullish sentiment on Monday by stating that even with a potential increase in Iranian exports, "We estimate that Brent prices would still reach $80 per barrel in fourth quarter 2021."
For his part, John Kemp, commodities analyst at Reuters, pointed out that fund managers now hold a combined net long position across all six petroleum contracts of 836 million barrels, "up by almost half a billion barrels since the start of November, before successful vaccine trials were announced."
Also on Monday, CME Group noted that since it got a head start in recovering from the pandemic, China's economic growth hit 6.5 percent in the fourth quarter of 2020, meaning that it grew 2.3 percent for the full year; CME reiterated the International Energy Agency's contention that China this year it is expected to officially surpass the U.S. as the world's largest oil refiner.
Meanwhile on the mergers and acquisitions front, Monday saw Cabot Oil & Gas Corp and Cimarex Energy Co announce a merger to form a U.S.-wide oil and gas firm with an enterprise value of some $17 billion, bringing together Cabot's gas-rich Marcellus shale positions in the U.S. northeast and Cimarex's oil-heavy acres in West Texas.
The deal comes on the heels of EQT Corp's bid to buy Alta Resources and Pioneer Natural Resources's agreement in April to buy privately held DoublePoint Energy for $6.4 billion.