It’s doom and gloom in the oil markets today, with the demand outlook remaining weak for at least the next 18 months.
The end of Q3 is likely to bring in more volumes of oil trade, but is not expected to shift the markets from its fundamentals.
Daily demand sits at 4-5 million barrels fewer a day than a pre-pandemic world would have suggested, making the forecast of oil stable, if not weak.
Trading just above $40 at opening bell, an oversupply of US crude stockpiles continues to limit the market, and as tensions in the oil space increase between the US and the rest of the world, particularly the Iranian sanctions, the price is oil is expected to simmer down to sub-$40 levels soon.
Despite this, global demand is picking up pace, as countries return to their status quo, potentially boosting markets to the $50 mark into 2021.
Pierre Andurand, one of the biggest specialist oil hedge fund managers, said he expected Opec would need to keep production cuts in place well into 2021 and the cartel’s member countries were not in a position to start adding barrels back to the market, as they had planned.
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