Crude Oil to rebound towards $75-78 by year-end as vaccination rates rise – ANZ

The Delta variant is casting a cloud over the oil market. Although oil demand is expected to slow, it will not cut off the path to normalisation. Crude oil prices are set to rise to $75-78/bbl in Q4 2021, according to forecasts of strategists at ANZ Bank.

Surging COVID-19 cases in Asia to weigh on oil demand

“Despite the Delta variant headwinds, we expect continued growth in vaccination rates to support the ongoing recovery in global demand. We expect Q4 2021 demand to rise 2.6 million b/d to 98.63 million b/dfrom Q3, the highest levels seen since Q4 2019. Overall, this should see the market remain tight, with further drawdown in inventories around 800kb/d in Q3 and 1.6mb/d in Q4.”

“Crude oil prices will face some downward pressure in the coming weeks due to lingering headwinds in Asia and because the market has been leading consistently higher and earlier than what fundamentals suggest.”

“We expect rising vaccination rates to lead to an improvement in sentiment in the latter part of the year. Along with the continued recovery in demand, we should see crude oil prices return to USD75-78/bbl in Q4.”