Oil Prices Look Ahead to China Rebound, Oil prices have been on a roller coaster ride over the past year,
but investors are now looking ahead to a rebound in 2021.
As China, the world’s largest oil importer and consumer of energy products recover from its coronavirus-induced economic slowdown and demand for oil increases once again.
Topics
Upside-Potential-of-Global-Oil-Demand
Achieving-Covid-Zero
OPEC-and-its-Allies
Upside-Potential-of-Global-Oil-Demand
Many analysts believe this could be an opportune time for investors to set themselves up
for long-term gains in the crude market.
The International Energy Agency (IEA) recently forecasted
that global oil demand would rise by 5 million barrels per day (BPD) next year
as economies recover from their pandemic slumps.
This is good news considering last month’s Organization of Petroleum Exporting Countries (OPEC)
the report showed that production cuts were still needed to balance out supply with demand levels,
a sign of further upside potential when it comes to prices going forward.
China has already begun taking steps towards increasing its domestic consumption
through various stimulus measures such as tax breaks on gasoline purchases
~and subsidies for electric vehicle manufacturers which should help boost overall
fuel demands even more so than previously expected this upcoming quarter.
Significant nations like India also slowly reopening their markets
after monthslong lockdowns due to Covid-19 restrictions being eased worldwide;
there appears to be room left yet again within these countries’ respective national budgets
which can provide additional support towards stimulating growth within these regions too
ultimately leading back to higher global consumption rates down the line!
All eyes are now firmly placed upon Chinese authorities
who must continue delivering pro-growth policies if they wish to keep investor confidence high
throughout 2021 while simultaneously helping spur recovery efforts across other parts of the Asia Pacific region too;
especially given how much influence Beijing holds over international petroleum prices at the present moment right now!
For those seeking longer-term investment opportunities then
setting up positions around current price points may prove beneficial
come result if all goes according to plan here soon enough.
A Galaxy of Possibilities
It’s no secret that the Covid-19 pandemic has affected global economies, including China.
However, there is no hope for recovery as the country moves closer to achieving “Covid Zero” status.
This means that Chinese demand for commodities is poised to rebound in 2021 and beyond!
The Chinese economy was hit hard by the pandemic,
but it has been resilient in its ability to recover quickly from economic shocks.
With Covid-Zero approaching, many industries are beginning to ramp up production once again
and this will inevitably lead to an increase in commodity demand from China.
In particular, steel and aluminium have seen increased orders due to their use as inputs
into construction projects across China which have restarted after months of delays caused by lockdowns imposed during 2020.
Furthermore, agricultural commodities such as soybeans are also set for a boost
thanks primarily due to increased government support measures designed specifically
at boosting domestic consumption of these items within mainland China itself
something which should help alleviate some pressure off international markets
where prices remain depressed despite strong export numbers out of Brazil & Argentina earlier this year.
Finally, energy-related products such as coal, oil & natural gas could also benefit significantly
if Beijing decides to go ahead with plans previously announced last summer
regarding increasing subsidies aimed at encouraging more efficient energy usage
amongst households throughout mainland China.
If successful, then we could expect both domestic production levels along
with imports of said products to be boosted over the coming months
leading towards potentially higher overall commodity prices later down the line
when compared to what they were pre covid 19 outbreak back in 2019.
OPEC-and-its-Allies
Crude oil trades near $78 a barrel, up more than 4% in 2022.
This surge is due to the increasing demand for energy as economies recover from the pandemic-induced recession.
The Organization of Petroleum Exporting Countries (OPEC)
and its allies have also implemented production cuts that have helped buoy prices over the past year.
Despite this positive outlook, some risks are still associated with investing in crude oil.
The most significant risk is that global economic recovery could be slower than expected
due to rising COVID-19 cases and new variants of the virus emerging worldwide.
If governments continue to impose restrictions on travel and business activities,
it could lead to lower demand for crude oil which would cause prices to fall again after their recent gains.
Additionally, there are concerns about whether OPEC+ will continue
with their current agreement regarding output levels or
if they will decide not to adhere strictly to them going forward, which may also affect prices negatively.
Overall, despite these potential risks’ investors should remain optimistic
about prospects for crude oil trading near $78 a barrel in 2022
given signs of recovery across many major economies worldwide coupled ~
with OPEC’s commitment towards maintaining supply stability through production-cut agreements.
However, it is important for them to monitor any changes closely
so they can adjust their strategies accordingly if necessary.
