Thursday, February 25, 2021
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National: Oil futures forecast a slight decline in price over the medium term

This morning in the weekly oil and gas review, Dr. Gil Michael Befman addresses the situation created in the US due to the extremely cold weather that led to a slowdown in some refineries and in some even a complete halt to operations, which is expected to make it difficult to return quickly.

This damage is particularly significant in Texas, where four of the largest refineries have been significantly damaged and are expected to take several weeks to repair the damage and return to operation, raising the potential for a prolonged U.S. fuel shortage. And it increases the economic viability of market traders to import fuels from Europe to the US.

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Despite the decline in U.S. oil production in the past week, Befman notes that “in the coming months U.S. oil production is expected to return to a growth trajectory, which is expected to” challenge “the current price level. Article link

The market appears to be very much priced into a future deficit.

On the demand side, Befman refers to India, where refineries are exploring the possibility of purchasing oil from Africa and North America, against the backdrop of OPEC + production quotas which have led Middle East oil producers, who are long-term oil suppliers, to reduce oil supplies.

India is the third largest importer of oil in the world and it is estimated that its oil imports will increase by at least 10% this year compared to 2020. In our estimation, this increase in demand is expected to support the price of oil as long as OPEC + maintains production quotas. “

In conclusion, Befman notes that the advancement towards global marketing a growing variety of vaccines, which can be easily transported, and brought to developing countries at a low price, is an important signal of the potential increase in demand for crude oil later, which is already very optimistic “consensus” oil prices. Accordingly, futures forecast a slight decline in the price of oil in the medium term.

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