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Based out of Auckland, New Zealand, we bring an institutional trading experience to the retail market.
Mark O' Donnell
Research Analyst
January 11, 2021

Oil markets seeing a brighter future

Oil markets seeing a brighter future

24th February 2020 was when the last time we saw oil hovering around the $55.80 mark. The Oil markets were hammered in 2020, taking investors and traders back to their economics 101 classes.

However, unlike traditional markets, the Oil markets have something traditional markets do not – controlled supply.

24th February 2020 was when Brent was last at this price level

OPEC+ controlling the supply of Oil

OPEC+, a 24- country cartel, took drastic measures as of late to control the drop in oil price by restricting supply. The most recent supply cut by 1 million barrels a day by Saudi Arabia has pushed Oil markets to levels not seen since 24th February last year. Saudi's unexpected move was on the back of the OPEC+ decision to gradually bring back supply to the market in January.

However, the de-facto leader claims the Oil market throne

The Energy Minister of the Oil-dependent country, Prince Abdulaziz bin Salman stated that "[Saudi Arabia] are the guardian of the [Oil] industry", showing their influence in the Oil markets.

Oil markets getting bullish recommendations from institutions

Since December, Oil prices have rebounded 18% on the vaccine's slow rollout, peaking at around $56 a barrel. With the rollout of Vaccinations, analysts at Goldman Sachs are becoming bullish on the Black Gold, stating that they predict Brent could rise to $65 a barrel by the summer of this year, bringing the timeline half a year from their previous prediction. However, they stated that "given the magnitude of the recent rally, however, markets are likely to consolidate near-term,"

Given the Coronavirus situation worldwide, the demand situation has not improved to the point where it was on the 24th February, giving the price of oil the characteristic of a forward-looking stock instead of a spot looking commodity.  However, if the vaccine continues to make its way around the world and demand truly starts picking up, we may see the Oil markets return back to a relative norm.

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