Despite the increase in demand next year, crude oil prices are not going to rise too much soon.
On the last day of last week, the price of oil West Texas Intermediate (WTI) per barrel (159 liters) fell below 40 to 39.93. In addition, the price of Brent crude oil has decreased by $41.81.
In fact, the crude oil market has been volatile since the start of the second wave of corona infections since the beginning of this month. Earlier this October, Saudi Crown Prince Mohammed bin Salman and Russian President Vladimir Putin spoke on the phone about the state of the world oil market.
They agreed to continue cooperative relations between the top oil-producing countries. They have agreed to the OPEC Plus agreement with the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
On the other hand, despite the turmoil this year, OPEC thinks that the demand for crude oil will increase next year. The demand for 6.5 million barrels of crude oil per day will increase from next year. More than 9.8 million barrels of crude oil will be produced.
According to Statista, global demand for fuel crude oil in 2019 was more than 100 million barrels per day. It is estimated that by 2020 this demand will be reduced to 97 million barrels.
Non-OPEC liquids supply estimated to contract by 2.4 mb/d y-o-y, to average 62.8 mb/d.
Oil supply in 2020 is forecast to decline mainly in Russia with, US, Canada, Kazakhstan, Colombia, Malaysia, & Azerbaijan while projected to grow in Norway, Brazil, China, Guyana & Australia. pic.twitter.com/YZ7xXQOlpR
— OPEC (@OPECSecretariat) October 19, 2020
The main reason for the decline in demand is the negative economic impact of lockdown and Covid-19 around the world. However, it is estimated that even if the demand increases next year, the price of oil will not increase much.
The price of fuel oil has been declining in the world market since March this year. At that time, coronavirus has spread all over the world Borders were closing in the country, people were being placed under house arrest.
All types of transport, including aviation, were shut down. Reducing demand has a negative impact on crude oil prices. The price of crude oil fell below $50, the lowest in more than a year.
OPEC and non-OPEC countries have been meeting in Vienna, the Austrian capital, since March 5 to review the situation and decide what to do. It decided to reduce crude oil production by 1.5 million barrels a day to raise oil prices, which is about 3.8 percent of the world’s total supply.
In April, for the first time, world crude oil prices fell below zero. US oil prices stood at minus 38 per barrel. This means that producers have paid the opposite buyers to buy oil instead. This has never happened before in the history of the world.
The demand for fuel oil between the west and the east of the world is quite different now. Demand for this specialty has grown significantly as a result of recent corporate scandals in the United States, Europe and Latin America. On the other hand, the demand for jet fuel in Asia has turned around.
Many analysts say there is currently a huge gap in oil demand between East and West. Asia is already moving towards pre-epidemic demand levels.
— World Oil Online (@WorldOil) October 28, 2020