- WTI futures close in on 6-week high
- Oil likely to reach $65 per barrel in 2021
- The resurgence of coronavirus infection rates could sabotage gains.
Crude oil maintained its bull run on Friday morning, aided by improving demand for the commodity, as well as the supply cut measures that were recently implemented to support recovery. Things are currently looking so good for the oil industry that it is in the third week of strong gains with prices already reaching $28 per barrel.
The price already surpassed the $27.44 and $26.92 targets and analysts expect the gains to continue especially now that Saudi Arabia and its allies decided to reduce supply to Asia, Europe and the U.S. There has also been a notable uptick in demand for the commodity aided by some economic activity and demand is expected to increase as economic activities slowly resume.
Crude oil outlook
Goldman Sachs analyst Jeffrey Currie believes that the oil industry has seen the worst especially after the record lows that took place in March and April. The analyst believes that oil prices will continue to recover and likely even go as high as $65 per barrel by 2020. So far the gains have also been good to oil futures as evident by WTI Oil’s gains which have reached 6-week highs.
Oil prices might be improving but the industry might not be out of the woods yet. There have been increasing concerns about the second wave of coronavirus infections especially with major governments planning to ease the restrictions currently requiring many businesses to be closed. The plans are aimed at supporting economic recovery but there are concerns that those measures might also lead to a new wave of infections especially since there is still no COVID-19 cure.
The second wave of infections would likely lead to further stringent measures which would consequently affect the demand for oil. In other words, the oil prices might still experience more decline moving forward.