Gas Demand Approaches Pre-Pandemic Levels
March 8, 2021
Crude prices rally hard at the open of Sunday night trading after the news hit of a Houthi-led missile attack on Saudi Arabia. The Houthi rebel claimed responsibility for the attack of ballistic missile and drones in Ras Tanura, the world largest oil terminal and one of Saudi Arabia’s most protected refineries. Brent crude oil hit a high of $71.38 but has now given back much of that gain. The trade above $70 dollars was the first time Brent crude has traded over $70 since the pandemic began.
There was not production lost to these attacks, but this is the second attempt in the last month and shows the escalated tensions in the area could cause additional risk premiums to be added in the market.
According to pay data from GasBuddy, US gasoline demand jumped 5.9% for the week ending Saturday, pushing demand to the highest level since the pandemic started for the second straight week.
The stimulus hopes are continuing to push the market as the hope of the passage of the $1.9 trillion deal gets closer.
China and India are buying more crude oil from Iran as Iran has shipped record volumes to China in the last few months. The actions by Iran are being taken under the assumption that the US will not enforce sanctions against Iran under the Biden administration.
There are many banks, energy consulting companies that have raised their price forecast with the OPEC+ decision being the biggest factor, here are some of those updates. Citi Research said the OPEC’s decision will likely accelerate the oil stock draw down, lifting prices even more than OPEC+ already has. Citi forecast that before the next OPECC meeting, oil prices could be over $70. UBS raised it’s 2021 year-end forecast for Brent to $60 per barrel from a previous forecast of $53. Commerzbank revised its Brent year-end forecast upwards by $10 per barrel to $60 per barrel. It also revised it second quarter forecast to $65 per barrel. Wood Mackenzie predicted an increase in crude prices towards $70-$75 per barrel in April supported by the decision taken by OPEC+ to roll over output. ANZ Bank raised its Brent oil price forecast following OPEC+ decision to continue production at its current levels. It increased its short term target for Brent to $70 per barrel.
Baker Hughes reported that oil rigs were up 1 to a total of 310.
Saudi Arabia’s Energy Minister Price Abdulaziz bin Salman said he remains cautious of the demand recovery. “ I will believe it when I see it,” he said on several occasion during the hour-long press conference.