WASHINGTON (Pakistan Point News / Sputnik - 08th December, 2020) Global oil prices set by Brent crude should average $49 per barrel in 2021, up $6 from the fourth quarter of 2020, due to lower production and higher economy activity expected from the impact of COVID-19 mitigating vaccines, the US Energy Information Administration (EIA) said on Tuesday.
"EIA expects that Brent prices will average $49/b in 2021, up from an expected average of $43/b in the fourth quarter of 2020," the agency said in its Short-Term Energy Outlook (STEO), which is published monthly. "Brent prices increased in November in part because of news about the viability of multiple COVID-19 vaccines, along with market expectations that the Organization of the Petroleum Exporting Countries (OPEC) and partner countries (OPEC+) would delay or limit production increases planned for January 2021."
On Tuesday, Brent hovered at just under $49 per barrel, down $17 or 26 percent on the year due to the negative impact of the COVID-19. At the height of the oil market collapse in April triggered by the pandemic, Brent traded at just under $17.
Breaking down its forecast for next year, EIA said Brent was expected to average $47 in the first quarter of 2021 and rise to $50 by the fourth quarter.
"The first quarter 2021 average is $5/b more than forecast in last month's STEO, and the fourth quarter average is $1/b more, it said. "The higher expected first quarter prices reflect steeper expected global oil inventory draws as a result of the December 3 OPEC+ decision to limit its previously planned production increases in January 2021."
The EIA, however, added that it expected high global oil inventory levels and surplus crude oil production capacity to limit upward pressure on oil prices through much of 2021.
