Rystad Energy’s head of oil markets Bjornar Tonhaugen has discussed the global oil recovery segment and oil market scenario in the light of oil price decline and vaccination drive
According to Tonhaugen, there are no silver linings for oil prices this week. The positivity that helped prices reach and stay close to US$70 per barrel earlier this month has now evaporated, giving way to concerns over vaccination campaign setbacks and crude stock levels.
The speed of the oil demand recovery is again at risk and will largely depend for the countries that are using the AstraZeneca vaccine and have paused it on how quickly the vaccination campaigns resume.
Crude stocks had been declining at fast rates and going back to a rise-mode is never positive for prices that normally benefit when less crude is available for the market, as that includes crude in storage.
If the market fears turn true and stocks are up again, then it will be difficult for Brent to hit again US$70 per barrel very soon, at least not until some positive news come from the vaccination front.
“We have long estimated that Iranian flows have been far larger than tanker-tracking estimates have suggested, north of one mmbbl per day, and this figure has now increased further, leading to vessel congestion outside Shandong and affecting demand for spot cargoes from Angola to Brazil,” Tonhaugen added.
A draw in crude stocks would be the sign that could reinvigorate the bull’s confidence again, indicating that refineries have recovered faster than the market anticipated.
