Crude oil prices could exceed $140 per barrel yet this year if China’s economy fully reopens, hedge fund manager Pierre Andurand said on Friday.
Andurand sees the possibility of crude oil demand growing by more than 4 million barrels per day this year—a 4% increase over last year. This far exceeds crude demand growth set out for 2023 by other oil market forecasters.
“I think oil will go upwards of $140 a barrel once Asia fully reopens, assuming there will be no more lockdowns, Andurand said, adding that the “market is underestimating the scale of the demand boost that it will bring.”
Andurand’s forecast goes against the trend that crude oil prices set so far this year. During the first week of the year, crude oil prices tumbled by 9% in the first two trading days in what was the worst start to a year since 1991.
Last week, Andurand said in a tweet that oil demand could increase between 3 and 4 million bpd this year, aided by the switch from oil to gas.
China’s reopening has been on the oil industry’s radar ever since it employed its zero-covid policies and locked down much of its economy. China only recently made significant changes to its covid policies, abandoning its strict measures in favor of relaxed testing requirements and travel restrictions. But China’s reopening has been plagued with a new wave of Covid, spooking many oil bulls off what would be their rejoicing at what should be a significant bump in demand.
Andurand did say last week that oil demand will be limited somewhat by a growth in the EV sector, as EVs have the potential to displace 600,000 bpd of oil demand.
By Julianne Geiger for Oilprice.com