By Adedapo Adesanya
Oil prices ended the year 2020 on a positive note, in a year marred by the coronavirus pandemic and an oil price crash.
On Thursday, the Brent crude gained 17 cents or 0.33 per cent to sell at $51.80 per barrel, while the United States’ West Texas Intermediate (WTI) rose 7 cents or 0.18 per cent to trade at $48.42 per barrel.
Futures might have ended 2020 on a positive note but they suffered a hefty yearly fall, only partially recovering from the hit to crude demand from the COVID-19 pandemic.
Brent, according to market analysis, fell 21.5 per cent for the year, its largest annual drop since 2015 while the WTI fell 20.5 per cent in 2020, its second annual fall in three years.
In terms of month and quarter, Brent crude rose 8.9 per cent in December and 26.5 per cent in the final quarter of the year while WTI saw a 7 per cent rise in December and gained more than 20 per cent for the fourth quarter.
Oil prices were hit during the first wave of the COVID-19 pandemic and this was worsened as Saudi Arabia and Russia engaged in a price war that flooded the world with oil, dropping prices to unprecedented levels.
However, efforts from the Organization of the Petroleum Exporting Countries and its allies (OPEC+) in curbing production excesses helped the market recover a little after instituting a record cut that took away 10 per cent of global supply. This was later tapered in batches with output level expected to rise from January 1.
OPEC+ will meet on Monday and is likely to further relax its output curbs, adding another 500,000 barrels a day to global supply.
Business Post reported that crude was buoyed Wednesday by a larger-than-expected drop in U.S. crude inventories, as well as weakness in the US dollar.
Crude oil inventories decreased by 1.2 per cent for the week ending December 25, according to data released by the Energy Information Administration (EIA). Inventories decreased by 6.1 million barrels to 493.5 million barrels, more than the market expectation of a fall of 2.1 million barrels.
A weaker dollar is typically seen as a positive for commodities priced in the US unit, making them cheaper to buyers using other currencies. Expectations for a lower trend for the dollar have boosted expectations among bulls for further gains for crude and other commodities in 2021.
Next year, there are expectations that oil demand will rebound more slowly than initially anticipated as the aviation sector takes longer to recover from the coronavirus hit.
Global consumption is expected to come in at 96.9 million barrels a day next year which is up from the 91.2 million barrels per day forecast for 2020, according to the International Energy Agency (IEA).
On its part, OPEC final 2020 oil demand forecast stood at 9.8 million barrels per day lower than 2019 and projects oil demand to bounce back by 6.2 million barrels per day in 2021.
Modupe Gbadeyanka