2021 predictions: what is likely to happen to the price of oil? - ArabianbusinessThe price of Brent crude oil will remain “subdued” in the first quarter of 2021, but could rise to $55 per barrel by the fourth quarter of the year, according to an industry expert.
Brent crude futures rose 19 cents, or 0.4 percent, to $51.28 a barrel early Wednesday morning as a US coronavirus fiscal aid package and a decline in crude oil inventories lifted prices.
Added optimism over the global roll-out of coronavirus vaccines also continues to impact prices.
Louise Dickson, oil markets analyst, Rystad Energy, told Arabian Business they have revised their overall 2021 Brent base case up to $51 (from $48).
She said: “The increase is more than justified by our tightening global crude and liquids balances.”
Risks remain on the demand side and a slip-up in vaccine implementation, a third wave of coronavirus cases, or a serious wave of virus mutations, could all tether and flatten demand growth and put downward pressure on oil prices.”
However, Dickson said a weaker dollar will also provide marginal support to oil, and should low central bank rates and historic government spending continue to be the consensus in 2021, “the stock market has reason to remain feverish”.
As OPEC+ prepares to meet next week, traders are looking out for indications of changing sentiment among its members on their previously agreed cuts. Over the long term, Iranian plans to hike oil production in 2021 continue to weigh on the market and threaten to undermine the group’s efforts to ramp up output while avoiding flooding the market.
“OPEC+ can’t wait, particularly Russia and even Iraq, to pump more barrels,” said Tariq Zahir, managing member of the global macro program at Tyche Capital Advisors. “They want things to go back to normal, so there’s more risk to downside than upside.”
Meanwhile, Taiyab Zain Shariff, senior analyst with Rystad Energy, has hailed the discovery of four oil and gas fields by Saudi Aramco, which was announced earlier this week.
It was revealed on Sunday that the oil giant had discovered non-conventional oil in al-Reesh oil field, north-west of Dhahran.
Non-conventional gas has also been discovered in al-Sarrah reservoir at al-Minahhaz well, south-west of the Ghawar oil field, and at al-Sahbaa well, south of Ghawar. Gas from al-Minahhaz well amounts to 18 million standard cubic feet daily, along with a daily 98 barrels of condensate, and out of al-Sahbaa well a daily rate of 32 million standard cubic feet.
Shariff told Arabian Business: “These new unconventional discoveries fall in right place to help the company achieve its evolving organizational model and understand the unconventional challenges. Although the discoveries are of medium range, they open up new opportunities in the mudrock shale plays and tight reservoirs, for example the Al-Reesh discovery located in the Tuwaiq formation would test the extra light crude deposited in mudrocks and, Al-Minahhaz and Al-Sahbaa discoveries testing tight sandstone reservoir in the Al-Ahsa region.”
He added this may not be the last oil and gas discovery, saying: “The state-owned oil company already have plans to further delineate these discoveries to find the extent and size of the new discovered fields and we could expect more of such discoveries in future to support the country’s unconventional resource strategy.”
