OPEC sees strong recovery in oil demand: Paul Hickin, S&P
ET Now: We are seeing oil at a multi-year high as we are seeing a rapid pace of vaccination that fuels hopes of a recovery, how do you see oil prices moving over the next two months, this will obviously be a concern for India, but for the rest of the world, as we see a recovery in demand, how do you see oil prices?
I think $ 70 a barrel is the support level now for oil for a while there is demand optimism even though this third wave and some issues with lockdowns and recoveries is not completely equal but there is still a recovery in demand and we see with the EIA report today examines 100 million barrels of oil in 2022. It has returned to pre-Covid demand levels, which is fueling really the optimism of the market. Although, with a caveat I would say – for the next couple of months we would like to see $ 70 a barrel as support and that could cause oil prices to rise during this period, but that’s the level that is starting to trigger OPEC plus group in the market and they’ve been very cautious lately, been very slow to bring crude back to market, given these demand concerns, but you’re going to see a lot more in the second half of the year. OPEC more crude is coming back to the market potentially a lot of Iranian crude as well. Even at these oil prices, you might start to see the shale coming back to life as well, it’s a bit of a slump, a bit of sleepwalking right now, but you might also see the shale coming back to life in the last quarter of the year. .
AND Now: We’ve seen a lot of supply discipline come in through OPEC plus, but once OPEC starts bringing more oil to market, of course there is oil coming from Iran as well, how do you think this will affect price in the long run?
Yes, and that’s going to cause oil prices to trend down – that extra crude will start to close the gap and compliance has been pretty good, but OPEC Plus has kept a lot of discipline for a very long time now, he’s been waiting for that light at the end of the tunnel and now he’s starting to see what finally emerged after some huge discipline last year especially, and you’re going to see compliance wane and you might see him come back pumping at will at some point – if this recovery in demand continues and it will continue to close the gap and keep the market in a uniform queue.