BAKU, Azerbaijan, Dec.1
By Leman Zeynalova – Trend:
Oil will be the main beneficiary of an effective vaccine against COVID-19, Trend reports citing Capital Economics, UK-based research and consulting company.
“The increased likelihood that a successful vaccine is rolled out has led us to revise up our world GDP growth forecast to 6.8 percent in 2021. The positive effect will be felt most in advanced economies, while China could lose out from a shift in spending from goods back to services.
“While most commodity prices plummeted in March-April in the wake of COVID-19 and measures to contain it, metals and agricultural commodity prices have now more than made up the lost ground. However, oil prices have struggled to recover, as demand has stagnated owing to homeworking and curbs on travel. Accordingly, we think oil will be the main beneficiary of an effective vaccine.
“We have raised our oil demand forecasts for 2021 and now forecast that oil demand in Q3 2021 will be higher than in Q3 2019. There is considerable pent-up demand for travel, leisure activities and holidays in the developed world. Meanwhile, on the supply side, we expect OPEC to maintain production restraint next year so that the market is likely to remain in a small deficit and stocks will be drawn down. As a result, we have revised up our end-2021 oil price (Brent) forecast to $60 per barrel. However, the 2021 surge in demand is likely to prove a one-off and by 2022, we expect prices to slip back,” the company said.
Capital Economics is also positive on the outlook for the price of gold in 2021 – despite its recent slide – as the company expects US real yields to fall a little next year, and the US dollar to depreciate a touch.
“By contrast, we expect industrial metals prices to ease back over the course of 2021. While the pick-up in global economic activity is good news for metals too, we think that the positive impact will be more than offset by the hit to demand from the gradual withdrawal of fiscal stimulus in China and by lower growth in China’s goods exports.
“Metal supply is also likely to revive next year, as mines re-open. And finally, the vaccine is positive for demand for many agricultural commodities. All else being equal, the rise in oil consumption should result in higher demand for agriculturals used to make biofuels (corn, sugar, palm oil). And the more “luxury” agriculturals (coffee and cocoa) should benefit from an opening up of hospitality industries. However, the recent surge in prices and higher supply in 2021 suggest that most agricultural prices will still end the year lower.
In a nutshell, the prospect of a vaccine has improved the outlook for commodities demand, but oil and other commodities associated with the travel and leisure industries will be particular beneficiaries,” said the company.
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