RIYADH: The world’s major hedge funds are betting on a jump in oil prices.
Their forecast has been based on what they see as the inability of many companies to increase production due to the ongoing economic impacts of the coronavirus disease (COVID-19) pandemic, which would mean a balance in supply and demand, according to Al Arabiya.
The funds’ outlook on future trends of crude prices has changed from their prediction of declines last year as a result of global lockdowns, a forecast that led to gains of about 26.8 percent, revealed eVestment data.
Brent crude crossed the $60 mark on Monday, boosted by supply cuts from major producers and amid hopes for further US economic stimulus measures.
International benchmark Brent crude was trading up 0.9 percent at $59.89 per barrel, at 8.55 am Makkah time, after it rose to $60.06 earlier in the day.
David Tawil, co-founder of the Maglan Capital hedge fund, said that crude prices would recover quickly as the world vaccination program and a return to international travel picked up speed, hitting between $70 and $80 per barrel by the end of the year.
“(Oil) demand will recover across the board, led by Asia-Pacific and North America,” Reuters reported, citing a recent research note by Fitch Solutions.
Oil prices derive their upward momentum from supply reduction in the market. Global crude and condensate production volume decreased around 8 percent in December compared to February, just before the COVID-19 outbreak started take hold around the world, according to Rystad Energy data.
Meanwhile, hedge funds increased their holdings in major US oil companies such as Exxon Mobil, ConocoPhillips, and Chevron Corp., said Al Arabiya.
