Fitch Ratings expects Brent prices to drop to $45 per barrel in 2021 — even though there’s good news on the vaccine front, the credit rating agency said this week.
That’s close to 9% lower than what a Refinitiv Eikon poll is predicting. Brent crude could be around $49.35 next year, with $50 being the most common forecast, according to a survey of 36 analysts. The U.S. Energy Information Administration expects the international benchmark to be at $46.59.
Dmitry Marinchenko, senior director at Fitch Ratings, said the company is more cautious.
“We expect prices to be, on average, at $45 next year for Brent,” he told CNBC’s “Capital Connection” on Friday. “This assumes that the demand will remain weak until at least the second half of the year, because the progress with mass vaccination probably will not be very quick.”
This week, the U.K. became the first country to approve Pfizer and BioNTech’s Covid-19 vaccine for emergency use. It is set to be given to medical workers from next week.
But doctors have warned that it will likely take months before vaccines are widely available.
Oil prices rose when a few pharmaceutical companies, including Pfizer-BioNTech and Moderna, announced high efficacy rates of more than 90% last month.
Still, Marinchenko said vaccines will “probably not have a significant impact” on oil demand until the second half of 2021.
“With weak demand, and with OPEC trying to manage supply … to avoid large surpluses or deficits in the market, we expect prices to be at $45 next year,” he said.
OPEC and its allies on Thursday made a deal to increase production by 500,000 barrels per day from January — much lower than the original agreement in April to raise output by 2 million barrels a day. That brings the production cuts to 7.2 million bpd from 2021.
Both oil benchmarks rose on Friday, with Brent up 2.01% at $49.69 and West Texas Intermediate gaining 2.02% to trade at $46.56.