Summary
- Brent oil futures hit US$ 57 per barrel while WTI soared to US$ 56.45 a barrel on Tuesday, the highest prices in 11 months.
- Commodity prices have been ahead of implementation of Saudi Arabia’s decision to slash its oil output by 1 million from February.
- Investment in Canadian oil industry is forecast grow by 12 per cent in 2021, as per the Canadian Association of Petroleum Producers (CAPP).
Oil prices jumped to a 11-month high as the US dollar weakened in the early hours of Monday, January 12. Brent oil price surged 1.60 per cent to US$ 56.55 per barrel, while the Crude Oil West Texas Intermediate (WTI) Futures soared as much as 1.61 per cent to US$ 53.09 a barrel (at 6:35am ET on January 12).
Oil prices have been rallying on the back of Saudi Arabia’s decision to slash its oil output by 1 million barrels per day from early February, to stop building up of inventories. Recent Democratic Party triumphs in the U.S. elections have also boosted hopes for a stimulus package announcement.
Meanwhile, the Canadian oil industry estimates to recover this year from the slump caused by the COVID-19 pandemic in 2020. The oil sector expects its total investment to grow 12 per cent in 2021 from the last year, as per the Canadian Association of Petroleum Producers (CAPP).
@Kalkine Media Image 2020
Oil has rebounded over 45 per cent since the end of October, driven by COVID-19 vaccine developments and assurances from the Organization of the Petroleum Exporting Countries (OPEC) and its affiliates to curtail oil out production.
The International Energy Agency (IEA) announced its crude-oil outlook report in the mid of December 2020. The IEA outlook envisages a gradual recovery of the oil industry by the end of this year.
Amid the fresh COVID-19 outbreak, the energy agency predicted that the market to stay volatile in 2021. While the IEA lowered estimates for global oil demand this year by 110,000 barrels per day, guided by the ongoing inventory burden on jet fuel and kerosene.
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While speaking to the media outlets on Tuesday, January 12, IEA Executive Director Fatih Birol has maintained the status quo and cautioned the oil producers to be aware of crude’s worsening share in the future primary global energy mix. The future energy mix in 2050 indicates the highest growth rates for renewable energy resources, according to the World Energy Council. However, Investors are also contemplating the possibility of higher production from North America.
Faith Birol has also suggested that oil drillers should consider ongoing electric vehicle trends.
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