The increasing number of Covid-19 cases worldwide could impact the recovery of oil demand again, according to Kuwait-based KAMCO Invest. Crude oil prices have continued to rally in January after hitting $50 per barrel in 2020. KAMCO Invest said that it was attributed to colder temperatures towards the end of the year and OPEC’s announcement to continue to cut production in 2021.
In its report titled ‘Oil Market: 2020 The Year That was’, KAMCO Invest has further said that a fall in inventories in the US, a weak US dollar and the accelerating pace of Covid-19 vaccination around the world were the other factors.
KAMCO Invest said in its report, “Factors that affected prices were mainly related to the resurgence of Covid-19 cases in Europe that has resulted in stricter lockdowns amid record high new cases and the reimposition of lockdown in China. A rally in global equity markets with several large markets including the US, Japan and India at record highs also supported sentiment in the oil market.
“Countries that were earlier expected to have effectively managed the pandemic, including China, have shown rising case counts recently. On the other hand, the global approval of new vaccines and accelerated pace of vaccinations with almost 33 million already administered brings some hope for the recovery from the pandemic.”
Last year, the Institute of International Finance (IIF) said that Brent oil prices will pick up to $47 per barrel in 2021, significantly lower than 2019 levels. The institute said that higher global oil inventory levels and surplus crude oil production capacity in key oil producers will limit significant upward pressure on oil prices next year.