A.D. The world economy, hit by VV-19 in 2020, has contracted 3.2%, with volatile assets such as markets, including stocks, highly volatile.
By 2021, with the development and distribution of vaccines, combined with stimulus measures, expanding between the advanced economy and many emerging markets and emerging economies, global growth is projected at 6.0%. The outlook for 2022 is estimated at 4.9% of GDP.
Positive global attitudes have helped to allay fears in markets, despite mistrust. As the world economy finally recovers from the recession of 2020, the impact of the devastating CV-19 cannot be overstated. World trade is also undergoing geopolitical disasters. These factors have raised serious concerns about the value of the four major assets – the US dollar, gold, crude oil and stocks.
Crude V-shaped recovery in 2020
Oil prices rose for the first time in more than three months in January 2020 following a escalating military standoff between Iran and the United States. This happened after the United States assassinated the Iranian general, Qassim Solemani. Brent ended the $ 38.60 barrel (RM291) on January 3, the highest level in Saudi oil production in mid-September. Eventually, tensions between the two countries eased.
In the oil industry, which was declared a pandemic on March 11, a short period of unrest broke out. Serious measures taken to contain the virus could lead to a historic fall in oil prices.
When governments around the world shut down businesses, there was a shortage of fuel by imposing obligations to stay home and restrict travel. Reduced economic activity beat supply and demand for oil. This is despite the agreement to reduce OPEC production.
On April 20, the May 2020 contract price for West Texas Medium (WTI) dropped from $ 18 (RM 76) to $ 3 (RM157). Following this, on April 21, Brent crude fell to $ 9.12 (RM38), far from $ 70 (RM296) a barrel earlier in the year.
The March 8 oil price war between Saudi Arabia and Russia was sparked by the two countries’ disagreements over oil production. OPEC and its partners, which ended a month-long price war in April, have agreed to reduce crude oil production by 9.7 million barrels a day for two months. It is the only major breakthrough in history. Oil production has been limited to 7.7 million barrels since July 1 and will continue until December 31, 2020.
As summer approached, oil markets began to change. As the year draws to a close in the second half (H2) of 2020, there are growing market expectations that OPEC will continue to limit or delay production. Reliable on vaccine release and December 3, OPEC + will be supported by improving economic activity. From January 2021 onwards, it will voluntarily adjust production from 7.7 million barrels per day to 0.5 million barrels per day.
Brent and WTI averaged $ 44 (RM186) and US $ 41 (RM173) barrels, respectively, by 2020 H2 and US $ 42 (RM182) and $ 37 (RM157) barrels, respectively, in the first half of 2020. Year, WTI and Brent average US $ 39 (RM165) and US $ 43 (RM182) barrel.
How high will crude oil be in 2021?
In the first seven months of 2021, on average, Brent crude oil prices rose by more than 50%, to $ 80 a barrel for the first time in two and a half years.
However, oil prices have been weakening for the sixth day since August 12. Investors are concerned about the demand for oil, as the supply of Covi-19 is increasing around the world as more supplies, including from US Brent Co., enter the world market. Barrel to US $ 68.23 (RM289).
In the last 13 trading days since the end of July, the international standard has lost 6%. WTI also reduced barrels to $ 65.46 (RM277) by 8% during the same period.
Attitudes toward fuel prices are still a challenge. In 2021, there will be an opportunity for H2 per barrel of oil prices to pick up on demand.
However, if the central bank suddenly increases interest rates due to inflation, the positive trend could suddenly end. It could also happen if OPEC raises demand or if a member of the Persian Gulf OPEC returns to the market and is unable to handle more Iranian barrels.
However, it seems unlikely that OPEC + will be able to handle more Iranian oil exports.
Many other mistrustes have also darkened his view. The spread of the Delta Covide-19 variant around the world has exacerbated fears of a reduction in oil demand, but it is unclear whether Iran’s exports will return to the market. In addition, renewed key measures and costs have led to gradual factory growth in China.
Anyway, at least I didn’t go down without explaining myself first. bpd. However, that difference is down to 300,000 in the fourth quarter. By 2021, H2 will produce an average of 33.0 million bpd in H2.
In the meantime, we feel that the crude oil market is testing the price level before it can cover these demand growth. This is difficult to measure, but our estimate is $ 80 a barrel (RM339).
Anything above that will have a negative impact on economic growth, as there may be a slight loss of interest.
Therefore, we expect Brent to briefly test the US $ 70 (RM297) barrel before European purchases fall and Iranian barrels return. That Brent price should return to the low level of US $ 70 (RM297). By 2021, we expect OPEC to fetch more than $ 70 (RM297) / pbl. However, our actual curve indicates that the actual price is $ 70 (RM297) per barrel, or $ 68 (RM288) a barrel.
Please contact for FX questions
ambank-fx-research@ambankgroup.com. For permanent income requests please contact: bond-research@ambankgroup.com
Treasury 21l 2108212
Treasury 21l 2108213
.