Energy and Oil
The World Bank expects energy prices to average a third higher in 2021 than in 2020. Cross industrial recovery in the economic giants has more than offset weary demand in Asian countries that are still struggling with pandemic restrictions. In the second week of June, US crude inventories fell for their fourth straight week to the lowest since February, indicating that this resurgent demand is not letting up. Iranian oil reserves remain off the global market while their Nuclear Deal negotiations continue, providing crucial price support. Crude oil has rallied over 40% year to date.
A further rally is heavily dependent on OPEC’s current supply restrictions. The group has announced monthly deliberations to reduce market volatility and quickly take profit from bull runs throughout the year by releasing supply. This could be a source of downward pressure on oil prices. On the other, even the most advanced economies have not fully opened air travel. The resumption of international travel will lend upside.