24. September 2020 | 13:10 CET
BP, Saturn Oil & Gas, Shell: Citigroup and Goldman Sachs see oil price at USD 60
Oil producers may be facing an exciting turnaround. The experts from Citigroup and Goldman Sachs see the price of oil in 2021 already back at USD 60.00 per barrel or even above. The statements of the analysts are supported by the assumption that the current oversupply will have been reduced by then. The recovery of economies around the globe will bring demand for oil back to pre-corona pandemic levels by the end of 2021.
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ISIN: CA80412L1076 , GB0007980591 , GB00B03MLX29
"[...] China's dominance is one of the reasons why we are so heavily involved in the tungsten market. Here, around 85% of production is in Chinese hands. [...]" Dr. Thomas Gutschlag, CEO, Deutsche Rohstoff AG
Normalization is expected
Citigroup's head of commodities research, Ed Morse, was quite optimistic in an interview with Bloomberg. Global demand for oil will reach pre-corona pandemic levels by December 2021. At the beginning of 2020, the price of WTI still stood at over USD 61.00 per barrel. The experts assume that an annual average price of USD 55.00 will be reached.
Vaccine gives the starting signal
Even the experts at Goldman Sachs are more optimistic about the situation on the oil market. They see even more potential for 2022, after USD 60.00 in 2021, and a price level of USD 65.00 is already within the realm of possibility in the third quarter of 2021. Goldman Sachs' analysts have a conclusive explanation for their assessment: "There is a growing likelihood that vaccines will become widely available starting next spring, helping support global growth and oil demand, especially jet."
Store and wait
The current price level of crude oil is used by oil traders for storage in supertankers at sea. As long as the economy is running with the handbrake on, the price of black gold will not rise significantly. However, as soon as a vaccine from a renowned manufacturer is available on the market for a broad mass of people, the demand for goods and transportation will increase and possible catch-up effects will be seen.
Buying instead of making
In addition to the large oil companies such as BP and Shell, this recovery effect will be particularly noticeable for smaller companies such as Saturn Oil & Gas from Canada. The young producer not only attaches great importance to environmental protection and therefore also brought Jim Payne, CEO of the CleanTech company dynaCERT, on board in March 2020, but is also planning an acquisition, as already announced in a news release. An acquisition in this market environment would have advantages over a drilling program of its own, CEO John Jeffrey already announced.
Good Canadian crude oil
Canada has the strictest environmental regulations in the world and protects human rights. For these reasons, the stock is an attractive investment from a moral and return point of view.