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Fitch Ratings said it expected Brent crude to average $ 45 a barrel next year, following OPEC + ‘s decision to start increasing production by 500,000 bpd per month starting in January 2021.
“We expect prices to be, on average, $ 45 next year for Brent,” Fitch senior director Dmitry Marinchenko told CNBC today.
“This assumes that demand will remain weak until at least the second half of the year, because progress with mass vaccination will probably not be very fast,” he added.
The vaccine news sent oil prices up late last month, and the fact that OPEC + had reached an agreement on the next steps in the production cut deal after lengthy discussions helped them stay higher this time. week.
However, this may change soon as the challenges around vaccine distribution and the fact that there will be more OPEC + oil entering the markets next year assimilate. And that’s not counting Libya, which continues to boost its production, without the limits of the OPEC + agreement.
Vaccines are unlikely to significantly affect oil prices, Marinchenko told CNBC, contrary to widespread expectations that once a vaccine is widely available, demand for oil will recover quickly.
In evidence that mass vaccination will not be as simple as many want to believe, Pfizer said earlier this week that it will only ship half the vaccine doses it originally planned for this year due to supply chain problems.
“With weak demand and with OPEC trying to manage supply … to avoid large surpluses or deficits in the market, we expect prices to be at $ 45 next year,” said Marinchenko of Fitch Ratings.
OPEC + agreed yesterday to begin adding half a million barrels a day to its total in a compromise decision that sought to bridge a deepening gap between those in favor of more aggressive cuts, led by Saudi Arabia, and those who prefer to relax cuts, such as the United Arab Emirates and Russia.
By Charles Kennedy for Oil Moderno
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