The global oil market is seeing brighter prospects after half a year of pummeling from the virus, with demand expected to rise slowly to prepandemic levels and on pace with overall economic activity in 2022, according to the World Bank.
The latest edition of the multilateral lender’s biannual Commodity Markets Report shows recovery is progressing gradually even as health considerations continue to hold back travel and tourism.
The bank raised its forecast prices for crude oil to an average $44 per barrel in 2021 from $41 per barrel this year. Last April, the World Bank’s forecast was at $42 per barrel next year from $35 per barrel in 2020.
“Energy prices overall—which also include natural gas and coal—are expected to rebound sizably in 2021, following large declines in 2020, an upward revision from April’s forecast,” the report said.
Prices of crude oil alone jumped by an average of 40 percent in the third quarter compared to the second quarter this year, pushing up overall energy price by one-third in the same comparative periods.
“[But a] resurgence of a second wave of the pandemic that results in more lockdowns and less consumption, and delays in vaccine development and distribution, could lead to lower energy prices than forecast,” the World Bank added.
Already, despite production cuts that jacked up prices of crude oil, the recovery has stalled because of concerns about renewed COVID-19 infections and their impact on oil consumption, the bank observed.
The contagion’s long-drawn effect on the industry is expected such that by end-2021, consumption could be around 5 percent below prepandemic levels.
“China [is] the only country where consumption will be higher [in 2021] than in 2019,” the World Bank said.
In the Philippines, since late January when the impact of the health crisis started to be felt in fuel retail, pump prices of diesel have gone down by a net of P8.65 per liter. For gasoline, the virus has slashed prices by P3.85 per liter.