Despite the rise in the level of tension in China-US relations, the price of oil remained stable, and even recorded a slight increase in the past week. Dr. Gil Befman, Chief Economist of Bank Leumi, Demand for oil is expected to remain low in the near future, and that by the end of the year there will be only a moderate increase in futures prices.
According to Befman, “Apparently, most of the increase in the price of oil is due to the weakening of the dollar in the world, which has offset in its nominal effect the effect of real expectations, to the increase in oil production of OPEC + members. “Historically, there has been a clear inverse relationship between the weakening dollar against the currency basket and the price of oil.”
The bank estimates that “demand for oil is expected to remain low in the near future, even though demand for petroleum products has begun to rise from the low tide. If the second wave of corona virus continues in wider areas, The demand for oil. ”
“For the time being, it seems that only after stopping the spread of the corona virus, in a way that will allow clear and lasting relief for the major oil consumers – aviation and transportation – can we expect further real increases in the price of oil.”
Looking to the end of 2020, Befman estimates that, “futures expect only a moderate price increase to about $ 46 per barrel of BRENT. The price of a WTI barrel is expected to rise to about $ 43 per barrel. “With an emphasis on the expiration dates of WTI contracts in the next two months, it is possible that oil prices will fall again, as long as the signs of a worsening of the virus’ condition continue to increase.”
“In the longer term, only after the world recovers from the ongoing corona crisis, there are factors that will support oil demand, including: Renewal of US economic growth after halting the spread of the corona virus and the implementation of IMO 2020 regulations that will increase demand for sulfur-poor distillates,” “Who was badly injured, will rise again.”
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