Despite the solid global recovery, demand for crude oil is likely to wane by the end of the year. In turn, this transformative change in the commodity's underlying supply and demand dynamic is likely to drive its price below $50 per barrel over the same period.
Part of the reason for the current rally is owing to the persisting conformity of OPEC members under the organisation's Declaration of Cooperation (DoC), which has managed to offset the massive supply glut caused by the coronavirus crisis. The other prominent factor was the massive amounts of liquidity that major central banks pumped to cushion the pandemic fallout and foster growth.
Though central banks remain accommodative in order to support the still-tentative stabilisation process, some of them are already starting to signal the possibility of monetary tightening next year. As central banks prepare to gradually take the foot off the gas pedal, global demand is expected to continue supporting itself without the need for external support.
Though still far from sight, this transformative change would crunch global energy demand, affecting the price of crude as well. This is why the rally of the commodity is expected to have already climaxed and to start depreciating from here on out.
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