Brent Crude poised for $80, Covid-19 vaccinations, and more

 Brent Crude poised for $80, Covid-19 vaccinations, and more

Brent Crude poised for $80, Covid-19 vaccinations, and more.

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Brent Crude poised for $80?

The sharp decline in Brent Crude over the last month was noticeable following the market shifting rally soon after the Pfizer(PFE) vaccine announcement that saw the price rally from $36.60 last year November to a post-pandemic high of $77.49 as expectations of a global economy was taken into account.

Over the last month, we saw a sharp decline back down to $65, as fears over the Delta variant caused panic selling as possible lockdowns came into the markets. Regardless of the fact that vaccination rates are increasing, the United States sustain an average of 1000 Covid deaths on a daily basis over the last week.

Goldman has a price target in mind for Brent of $80 by the end of the year, there’s a couple of factors that will come into play to see if this should be achievable.

China oil demands

With China’s PMI slipping nearly 1 per cent lower from last month concerns are raised as one of the largest producers of manufacturing goods globally slipped lower affecting oil demands. If we could see China’s current PMI of 50.40 rise, demand for oil from the Chinese should have a positive impact on Brent Crude.

Vaccination rates

Positives are that vaccination rates are on the increase as countries ramp up the distribution of vaccine. Despite the recent increase in Covid related deaths averaging at 1000 deaths per day for the last week, the Biden administration are fully committed to the distribution of the vaccine, that is evident in the decline in infections for high vaccination states.

COVID variations

The Delta variant has thrown some uncertainty into global recovery which has been one of the biggest concerns for Brent as global recover is in question, a major concern is the continued evolution of the Covid virus as new strains appear continually. Questions should still be raised on how the vaccine would be able to handle the variations.

OPEC+ supply disputes

Last month’s OPEC+ meeting resulted in supply being increased near its highs of $77, which saw a strong decline lower as the expectation of a rise in demand over the second half of the year was brought into dispute with recent data for global growth.

In conclusion if all else stays constant global governments are fully committed to getting the population vaccinated to at least herd immunity levels at ~75% to ensure that parity is restored, the sharp decline to $65, might very well be a buying opportunity with OPEC+ set to meet on the 1st of September to consider the impact of recent economic developments on their supply decisions if consensus are reached.

Zander van der Merwe

Zander van der Merwe is a Commerce graduate with majors in Economics from the University of Pretoria with an intense passion for the financial markets. My general focus is to look at the markets holistically combining strong Fundamental views with the incorporation of Technical analysis in the sphere of the United States stock markets, indices, commodities as well as the new kid on the block: cryptocurrencies. I incorporate this very strongly with my value add to the TD Markets team to ensure that clients are being given the transparent and in-depth view of the markets that is imperative to a career in trading. I am also a writer and market analyst at TD markets

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