Raymond James Energy Team Update - June 7

Raymond James Energy Team Update - June 7

Postby dan_s » Mon Jun 07, 2021 8:25 am

Energy Stat: 1.4 Billion in Asia's Lockdowns, but Oil Market Tightness Attests to Near-Complete Reopening Elsewhere

For nearly all of our readers in North America and the vast majority in Europe, it currently feels, at a localized level, like the pandemic is over - so much so that today marks the Raymond James healthcare team's final weekly COVID report. Well, at the risk of stating the obvious, the pandemic is not over - not even close - when we take a broader global perspective. To put an even stronger emphasis, there are still some countries, including sizable economies, where current COVID metrics are the worst they have ever been. That translates into global economic reopening that presents a much more mixed picture versus what watching CNN or even BBC News would suggest. At the time of our last reopening update on May, a staggering 1.8 billion people worldwide were in lockdown (i.e., subject to substantial business closures, per our 94-country tracker). The current figure - 1.55 billion - marks decent improvement versus a month ago, though it is still 2x worse as compared to January.

The latest spate of lockdowns is overwhelmingly in Asia-Pacific - the region with some of the lowest vaccination rates - and given the many supply chains that are affected, economic dislocation extends beyond the region. Case in point: the oil market. Asia ex-China accounted for 17% of pre-COVID global oil demand, and this remains a headwind for oil prices over the next several months. But it does not detract from our upbeat medium-term outlook - on the contrary, the current supply/demand tightness in spite of the epic lockdowns bolsters our case for oil prices to post further gains towards cyclical highs in 4Q21 and 1Q22, as Asia ex-China joins the rest of the world in reopening. < On May 26th Marshall Atkins, Head of Raymond James Energy Banking Group, forecast that WTI will rise to $90/bbl by Q1 2022.

June 6, 2021
Raymond James Equity Research
Dan Steffens
Energy Prospectus Group
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Joined: Fri Apr 23, 2010 8:22 am

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