As lockdowns begin to ease around the world, the prospect of a slow but steady ramping up of economic activity has seen improvement in market sentiment, particularly in the beleaguered energy sector. After an unprecedented slump in oil prices in late April that saw Brent crude fall to below $20 per barrel and West Texas Intermediate briefly shift into negative territory, the worst appears to be over, as prices gradually creep back up.
Yet despite the prospect of gradually improving demand, coupled with unprecedented production cuts by Saudi Arabia and others, oil prices are set to remain subdued compared with pre-pandemic levels for some time to come. S&P Global Ratings forecasts that Brent crude will recover to an average price of $50 per barrel in 2021, increasing to $55 in 2022, compared with around $68 at the start of 2020.
