Will oil hit 100 dollars a barrel in 2021?
Oil hitting one hundred dollars per barrel sometime in the next six months is the bullish sentiment held by many financial institutions. Analysts expect that Oil producers will not be capable of ramping up supply in time to meet an anticipated surge in demand. Increasing supply is not a simple undertaking. It generally takes weeks or months of investment to ensure the infrastructure is in place to manage the change in supply. The lift in demand is supposed to be driven by economies further relaxing travel and commerce restrictions in line with the rollout of their respective vaccine programs. The shortage of supply in the face of surging demand will then push the Oil price up another USD 30 per barrel. WTI and Brent are currently in-between USD 72 and 75 per barrel, with a general momentum to the upside. The upside momentum is in line with the general optimism swirling around global markets since the worlds major economies, particularly the US and the United Kingdom, reported the immense success they were having in vaccinating their populations. Two things could derail oil from hitting the milestone of $100  The major event that can derail the bullish predictions for Oil is, of course, Covid. In particular, the Delta variant spreading further afield. The drop in price that Oil experienced over Monday trading (28/06/20201) perfectly Illustrates the power of the delta variant to affect Oil prices. The price drop followed new lockdown measures in South Africa, Australia, New Zealand, and Malaysia. Throughout Monday trading, WTI fell by 1.5%, and Brent fell by 1.9%. Combine a drop in demand with a lift in supply  To make matters worse for the bullish predictions for the Oil price is the upcoming OPEC meeting on July 1st. The Oil-producing nations might agree to lift the number of barrels they supply. The last time OPEC met, they were drinking the positive-optimism cool-aid being served at that time. But, in doing so, they knowingly dismissed the lackluster data coming from the US and Eurozone and the worsening situation in India and Japan. However, OPEC noted that they had not ruled out a negative outlook for the rest of the year in their last meeting. Therefore, we could expect a different tone from the group in the forthcoming meeting. Suppose OPEC continues to believe that the global economies are on their way to recovery. In that case, they might continue on their plan to lift supply, and a bullish prediction extending to $100 per barrel begins to look less likely.