Bullish Bonanza for Oil Traders
This week is a “bullish news bonanza” for oil traders, according to Rystad Energy’s head of oil markets Bjornar Tonhaugen.
News of a possible vaccine against Covid-19, a projected draw in U.S. crude stocks and widespread expectation that OPEC+ may postpone a scheduled supply increase are fueling price gains, Tonhaugen noted in a statement sent to Rigzone on Thursday.
“Covid-19 won’t go away on its own and the vaccine is a major breakthrough to help counter the pandemic, which is what is needed for normality to return,” Tonhaugen said in the statement.
“If a vaccine will mean lockdowns will become a thing of the past, we can start talking about oil demand slowly fully recovering. Added to the vaccine jubilations, OPEC+ members have been saying left and right that ‘hey, we could possibly keep supply where it is for a while’, instead of increasing it from January,” Tonhaugen added.
“These OPEC statements are music to traders’ ears, who are also reading vaccine everywhere, and as a cherry on the pie they see expectations for crude stocks decline. No wonder why the finger is hitting the buy button furiously this week,” Tonhaugen went on to say.
The Rystad Energy representative questioned how long the short term prices can keep their levels, however, and warned that the vaccine will not really affect short term demand and will only enter the picture at some point next year, if successful.
“OPEC+ supply staying where it is will definitely help the market from January, but what happens today is that demand is actually falling due to the new lockdowns,” Tonhaugen said.
“This is a reality that will settle again and in our view prices won’t hold such gains for too long and it will take some time for all the positive news to really blossom,” he added.
At the time of writing, Brent crude prices were trading at $43.73 per barrel. Brent was trading under $40 per barrel on Friday last week.
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