By Geoffrey Smith
Investing.com -- Crude oil prices recouped overnight losses in early trade in New York on Monday, as progress in the authorization of vaccines to treat the Covid-19 virus offset some of the gloom from a worsening near-term picture.
By 11:15 AM ET (1615 GMT), U.S. crude futures were unchanged at $45.77 a barrel, while Brent crude futures, the international benchmark, were up 0.4% at $48.97 a barrel.
U.S. Gasoline RBOB Futures were up 0.9% at $1.2665 a gallon.
The market was generally quiet ahead of the release of the latest Short-Term Energy Outlook from the U.S. government, as well as the release of last week's inventory data from the American Petroleum Institute. Analysts expect U.S. crude stocks to have fallen by 1.51 million barrels last week, which would represent the first fall in four weeks.
With spreading Covid epidemics driving U.S. and European states to adopt ever tighter restrictions on business and social life, demand from the industrialized world is stalling. However, demand from Asia still seems robust, with Chinese data this week suggesting a smart increase in crude imports last month as spot prices dropped below the forward curve again.
In addition, many see the potential for a substantial rally next year as demand from an immunized population supports demand, while the massive cuts to capital spending undertaken by the industry this year tightens supply.
Goldman Sachs (NYSE:GS) analysts have adopted a target price for crude of $65 a barrel for the end of 2021, based on a forecast of global demand reaching 102.5 million b/d in 2022, global head of commodities research Jeff Currie said at a conference on Tuesday. For comparison, the International Energy Agency estimated that 2019 oil demand averaged 100.1 million barrels a day.
Despite lower demand from business travel, "We think the market's going to be in substantial deficit throughout the end of next year and beyond into 2022... You have structural under-investment in supply -- we call it the revenge of the old economy," S&P Global (NYSE:SPGI) Platts quoted Currie as saying. He added that "It's not just oil, it's metals, mining, the entire old economy has shortages in investment."