Oil to perform strongly in 2021 after COVID-19 vaccination campaign

Oil to perform strongly in 2021 after COVID-19 vaccination campaign

Improving mobility due to the massive COVID-19 vaccination campaign, in addition to economic growth and other strong macro tailwinds, may bode well for oil prices this year, according to a recent analysis by (BofA). Economists at the bank have estimated that the world GDP is set to rise by 5.8 percent in 2021 and expand further by 4.5 percent in 2022. This, coupled with other factors, such as inflation, monetary easing and a weaker US dollar, could mean that oil prices will appreciate. "A steady distribution of effective vaccines suggests that cyclical real and financial assets like oil should perform strongly into 2021,“ BofA said. "Big macro drivers - including a weaker US dollar, inflation and monetary easing- all point to higher oil prices in 2022.“ Brent crude has so far posted a relatively modest recovery, barely breaking $70 per barrel a couple of times this year. Global oil demand remains at 95 million barrels per day, or below 4 percent the seasonal pre-COVID level of 2019, and the OPEC+ group still holds plenty of spare productive capacity. "Both of these factors could soon change... While COVID-19 surge in India has depressed mobility, the link between COVID-19 cases and fuel