As an oil investment company, we believe that the oil and gas industry has seen both periods of immense success. This is as well as slumps that have shaken the sector’s very foundations. Perhaps, unsurprisingly, a global pandemic led, earlier this year, to something more closely approaching the latter. Back in March, monthly Brent performances sank to their worst performance ever, as the world ground to a COVID-induced halt.
Thankfully, those days are in the rear-view mirror and prices look to set to continue strengthening in 2021. The team here at TriStone Holdings Ltd, an exciting UK oil investment firm, wanted to look at what the future might hold, in some more detail.
Though stubborn pockets of misinformation persist, the widely accepted view is that the rollout of vaccines, worldwide, is good news – particularly for the oil and gas industry. It was almost universally accepted that the only way in which this pandemic could well and truly be put to bed was through the development of a vaccine.
Now, here in the UK at least, we have one vaccine already being rolled out. That’s not forgetting the others being reviewed by safety regulators, as we speak. In North America, it’s hoped that the first vaccinations will begin to be dispatched, both for the USA and Canada. For the oil industry, after the arrival of the pandemic, it was all about enduring and simply getting through. There was a countdown until the vaccine came around, and that’s precisely what’s been done.
What’s most impressive, though, is that the sector hasn’t just limped through, it’s shown remarkable ‘toughness’ and endurance. This grit is perhaps best exemplified by one striking statistic. 2020’s average crude output (in terms of million barrels per day) is expected to come at a figure only 7% lower than 2019. As an oil investment company, we consider the impacts of the pandemic on virtually every aspect of the world are. That’s incredibly impressive.
The Current Situation
This month, Brent crude surpassed $50 per barrel for the first time since March. In fact, oil prices just hit a nine-month high. Prominent market analysts and consultants, alike, have are in fairly universal agreement. They conclude that the return to travel and normality (or, a semblance of) will continually buoy oil demand, throughout 2021. In fact, some parts of the globe are already seeing crude demand recover to almost pre-pandemic levels. Looking at China and Japan, for instance, their consumption for petrol is now pretty much where it was before the outbreak of the Coronavirus.
Capital has been flowing back into the energy sector markets. This, along with everything else, is a sign of the industry’s continued return to form. WTI crude is also getting back towards the $50 per barrel mark. We would expect to see this only climb higher the more that global economies normalise.
What’s So Special About The $50 Mark?
Asides from the obvious point that higher prices are positive, generally, there’s something in particular about getting past that $50 mark, once again, that augurs well for the oil sector. Take a look at the state of Texas, in the US, for instance. They traditionally are one of the world’s leading crude oil producers. Now that prices are climbing upwards, again, exploration can resume. In addition, many wells, which have lain dormant for months, can be brought back online. In other words, they’ve become economically viable for the producers, again, which is beneficial for the industry, as a whole.
Confidence From Producers
Earlier this month, Amin Nasser, chief executive of Saudi Aramco (the world’s largest oil producer) also expressed optimism at the state of things to come. He was quoted as saying that, “the worst is behind us”. He was confident that, “we can expect a better recovery in the oil market in the second half of 2021”.
At the same time, though, Nasser urged caution. Companies across all aspects of the oil and gas industry will still have to demonstrate innovative thinking and agility. This will be crucial moving forward, to ensure their success. Still, on the whole, hearing such industry figureheads saying, essentially, that there’s ‘light at the end of the tunnel’, so to speak, will only further bolster market confidence.
Contact TriStone Holdings Ltd
It’s safe to say that we’re all fed up to the back teeth of this year. As it nears its conclusion, though, there’s hope that the oil market is once more finding the kind of form it was in pre-pandemic, and we’re certainly excited about that here! The mood here in our office? Confident, as ever!