Low Expectations for Oil Prices

| Multi-Asset

Conditions conducive for rising oil prices are evident in the macro data but not in the market. Oil spot prices have risen since the beginning of the year, but they have still not returned to their pre-pandemic levels. The year-on-year change in the Bloomberg Energy index thus remains negative (-18%).

Moreover, this price increase was achieved by translating the term structure of futures upwards in an almost homothetic manner: the oil price curve remains in backwardation. The market thus anticipates that this rise in oil prices will likely not be permanent. The December 2021 future stands at USD 59 for a spot price of USD 63, indicating that the market does not anticipate a price increase between now and the end of the year but rather a limited decrease.

 

Low Expectations for Oil Prices
Source: Bloomberg, Unigestion. Data as at 26 February 2021.


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