LRO analysis predicts that crude oil will experience wide fluctuations in 2021

　　On January 7, 2021, LRO chief analyst shiv kumar sehgal summarized the crude oil market throughout the year at an investor meeting, and analyzed and predicted the crude oil price market trend in 2021.

　　In 2020, crude oil prices generally showed a trend of opening higher and lowering, affected by multiple factors such as the global epidemic, supply and demand imbalance, the U.S. dollar and U.S. bond yields, and geopolitics. At the beginning of the year, crude oil prices once reached around US$70 per barrel, mainly stimulated by the military conflict between Iran and the United States. Subsequently, with the outbreak and spread of the epidemic, market risk appetite declined, crude oil demand fell sharply, inventories increased rapidly, and crude oil prices began to plummet. Against the background of the twists and turns of the "OPEC+" production reduction agreement and the sharp production cuts of U.S. shale oil, crude oil prices experienced the fourth oil price plunge in history from March 9 to April 22. The WTI update on April 20 It fell out of negative oil prices and made history. At the end of the year, crude oil prices closed at around US$50/barrel, a year-on-year decline of approximately 30%.

　　LRO Principal Analyst shiv kumar sehgal

　　In the coming year, crude oil prices will still face greater uncertainty, mainly depending on the following factors:

　　Changes in the global epidemic. The COVID-19 epidemic is one of the most important factors affecting the world economy and crude oil market. The world has experienced four severe rounds of COVID-19 in 2021. The Delta variant first discovered in India and the Omicron variant later discovered in South Africa have led to blockades and restrictive measures in some countries and regions, which may affect The economic recovery process has increased market uncertainty, thus increasing the safe-haven demand for crude oil.

　　The recovery of the global economy. The degree and speed of global economic recovery directly affect the demand level and growth prospects of crude oil. In 2021, the world economy will achieve the fastest growth rate since the recession in 80 years. However, under the influence of the epidemic, there are obvious regional differences in economic recovery.

　　Changes in crude oil supply. Changes in crude oil supply mainly depend on production adjustments from "OPEC+" and the United States. In 2021, "OPEC+" will actively control the pace of production increase, and the release rate of crude oil production capacity lags behind the recovery rate of demand. 6. After a sharp decline in crude oil production in 2020, U.S. crude oil production has recovered to a certain extent in 2021, but the growth rate is limited, mainly restricted by factors such as the reduction in the number of shale oil drilling rigs, rising costs, and strengthening environmental regulations.

　　Geopolitical risks. Geopolitical risks mainly involve important crude oil production and consumption areas such as the Middle East, Eurasia, and Africa, and have a major impact on the stability and security of the crude oil market.

　　Taking the above factors into account, LRO chief analyst shiv kumar sehgal predicts the crude oil trend in 2021 as follows:

　　Crude oil prices may fluctuate widely between US$40/barrel and US$70/barrel, with the main range being US$50/barrel to US$60/barrel. The annual average level is about US$55/barrel, which has rebounded from 2020.

　　Crude oil prices may experience some significant fluctuations under the influence of factors such as the epidemic, supply and demand, and geopolitics, but they will not break through the upper and lower limits of the above range.

　　Crude oil prices may stage a surge mid-year, testing resistance at $70/barrel, but then fall back toward the end of the year and break below support at $50/barrel.