Oil prices buoyed by recovery hopes
24 February 2021
Oil prices climbed over USD65/bbl this week
Oil prices have been buoyed by perceptions that inventory adjustment is proceeding and the global economy is recovering. US commercial oil stocks have fallen nine of the last ten weeks. The futures market has slipped into backwardation (near term contracts are higher priced than back-dated ones) pointing to short-term tightness. Goldman Sach analysts recently projected that higher Brent crude oil prices would hit USD75/barrel this year, or about 15% higher than current market prices. Higher oil prices may pressure bunker costs going forward. A breakdown in OPEC+ discipline or setbacks in containing the global public health crisis pose downside risks to the market amid heightened uncertainty.