Crude oil has become the most important source of energy for modern economies to propel their industries. But price volatility in the global market can be disruptive, especially to growing economies. After a major crash in oil prices earlier this year, the Covid-19 crisis has further hurt the oil sector.
Last month, the CEO of French international oil and gas giant Total, Patrick Pouyanne, said it aptly – the impact of the coronavirus pandemic has became a major barrier to the entire oil industry, with economies around the globe slowing down significantly.
In recent weeks, US oil production dipped sharply from 13 million barrels to 10.5 million barrels per day following a meeting of US President Donald Trump with major oil producers – OPEC members including Saudi Arabia and Russia – to slash oil production and stablise prices.
In the meantime, business activities and services in the US have resumed after the pause to combat the outbreak. However, some US reports have lamented that economic activities are yet to reach the levels prior to the Covid-19 outbreak.
Some positive signs are visible. US manufacturing data suggests that the American economy is on a growth trajectory, with US exports witnessing an upturn for the first time in 2020.
Trump has announced that the US will have a Covid-19 vaccine by end of this year, and senior health officers have expressed optimism over the production and effectiveness of such a vaccine.
Based on the prevailing scenarios, the price of oil is likely to hover in the range of $38 and $45 per barrel this month, as demand from major oil consuming countries rises again.
If a much sought-after vaccine is successfully produced before end of the year, it would likely be another boost for crude production, with oil prices possibly finding a bullish trend and spiking to around $43 to $60 per barrel.
While Golden FX Link Capital Co., Ltd. endeavours to ensure the accuracy of the analysis given, with the market subject to change, the company and its subsidiaries cannot guarantee this. The information provided is for reference purposes only and should not be regarded as Golden FX Link Capital Co., Ltd. recommending any particular type of leveraged foreign exchange, precious metal, stock or other financial product. Potential investors should be aware of the risks involved in any investment. As market volatility and the risk of losses can be significant, investors must carefully consider their financial situation and investment purposes before deciding on the direction of investment and which investment products are best suited to them.