NEW DELHI: Rising concerns over a resurgence in Covid-19 cases in certain European and Asian countries may have led to a 7 per cent fall in crude oil prices on Thursday, but investment banker Goldman Sachs believes that the pullback notwithstanding, Brent crude oil prices will resume increasing as global demand cranks up pace and will breach the $80 per barrel mark by this summer.
The forecast is bad news for Indian customers, who have already been confronted with all time-high petrol and diesel prices petrol rates even breached the Rs 100 per litre mark in certain locations over the past few weeks.
While no price increase has been put into effect by oil marketing companies since February 27 (dates for polls to state assembly elections in five states had been announced on February 26), oil industry sources confirm that holding crude prices steady during the past few weeks has already put a strain on oil firms. Two-thirds of the retail cost Indian customers pay for auto fuels goes to the exchequer either through state VAT or Central excise duties.
The pullback in crude prices this week will provide some relief on this front. Having breached the $70 per barrel mark early this month, crude prices have dived over the past week on concerns over rising Covid cases Brent crude was trading at $63.67 per barrel on Friday.
Goldman Sachs does not expect this to last, however, terming the price reduction “a big breather” for the oil market. According to the American investment bank, it expects to see a significant increase in global oil demand in the coming months as vaccination drives across the world begin taking effect. Analysts also note that despite the demand headwinds in Europe, it expects OPEC+ production to increass by 2.8 million barrels per day by August this year.
Crude oil futures tumble 2% on low demand
Crude oil futures fell 2.19 per cent to Rs 4,337 per barrel on Friday as participants reduced their positions on low demand. West Texas Intermediate crude was trading 0.3 per cent down at $59.8 per barrel.