Saxo Bank analysts: oil prices start to run out of steam

Experts from the Danish Saxo Bank made a forecast of how the oil price will change in the current year. They recalled that after the unexpected announcement of Saudi Arabia on unilateral cuts in production in February and March by 1 million barrels per day, the price reached $ 57.5 per barrel; but then the problem of a pandemic prevailed and its negative impact on transportation and, accordingly, on fuel demand. This anxiety is somewhat offset by a severe cold snap in Asia, due to which the spot price for liquefied gas soared, spurring demand for substitutes, including diesel fuel.

Also in support of oil prices, Joe Biden's approval as the new US president played last week. The expectation that his economic bailout measures will boost inflation has boosted demand from investors and speculators looking to hedge against reflation and the associated prospect of a weaker US dollar. Along with gold and copper, oil is one of the three most liquid commodities, and it is in these markets that reflationary demand is often concentrated.

Based on the current state of fundamentals, we still doubt that oil will still be able to significantly rise in price. Given how high the Brent price has risen since early November, even a drop to $ 49 a barrel would only be a weak correction within a strong uptrend. We believe that in the coming months it will trade steadily in the $ 50–55 region until the fundamental situation strengthens enough to continue its growth: first to 60, and towards the end of the year to $ 65 per barrel.