Oil market is still very much functioning on OPEC’s life support but there is much work still to be done in normalizing the level of floating storage inventory in order to see brighter prospects for oil prices, according to strategists at Deutsche Bank.
“Looking into 2021, the oil market is still working from a position of elevated inventory, so recovering demand on a vaccine deployment in H2 2021 would arguably first need to moderate these inventory levels before suggesting brighter prospects for oil prices.”
“Pre-vaccine, demand may struggle as winter concerns persist, which have led the IEA and OPEC to downgrade near-term demand forecasts.”
“Once a more complete demand rebound is in place, we should recall there is a significant volume of restrained OPEC productive capacity waiting to be released.”
“Along with the chance of some Iranian oil being allowed back on the market under President-elect Biden’s foreign policy, this is a meaningful restraint on the oil price overshooting our forecasts to the upside.”