Brent crude and WTI Oil futures are currently trading above the long standing resistance level of $40/bbl.
Supported by positive news amid rising vaccine hopes, and an overall positive global market outlook following what it seems to be a Biden’s win in U.S. election, Oil Price managed to break through the resistance level of $40/bbl to recover from levels below $40/bbl which both Brent Crude and WTI were at earlier this month.
Unfortunately there are limits to how high Oil Prices can go, and there are valid reasons why is that so. Pressured by renewed concerns over demand growth in the short-term as more waves of lockdowns seem to be taking place in various countries around the world with the continued spread of COVID19, Oil Price upward trend will continue to be capped at $45/bbl.
Looking back at 2019, the average Oil Price was approximately around $60/bbl. This year however, the average Oil Price seems to be hovering around $40/bbl.
How is Oil Price expected to perform in Q4 2020?Here is what I expect:
- Best case scenario: $50/bbl
- The average: $41/bbl
- Worst case scenario: $34/bbl
In the short-term till the end of 2020, I don’t see the Oil price going anywhere above $50/bbl. There are just to many negative sentiments that are pulling Oil Prices down than those supporting it to go up.
Knowing the fact that no one in the market knows exactly when and where is the point at which Oil Demand will recover and whether things will get better or worse when it comes to the global pandemic, it just makes the negative sentiments more likely to dominate the Oil Market going forward than any positive sentiments. These negative sentiments will definitely keep Oil Price under pressure until we close 2020.
Want to learn more about where Oil Price will be in 2021, stay tuned for my 2021 Oil Price Outlook that will be published in December 20, 2020.
