Some bullish factors are supporting the recovery of demand and prices of oil, which could hit $40-$50 a barrel in the second half of this year and touch $60 in early 2021, leading energy economist Dr. Mamdouh Salameh has said.

In a research paper – Oil markets and the shifting interests of its major players – for TRENDS Research & Advisory, Dr. Salameh said that these factors include a steep decline in the US shale oil production, a gradual easing of the global lockdowns, the implementation of OPEC+-led production cuts, China’s bouncing back at full speed and the prospect that the global glut is starting to decline possibly pushing the oil market into deficit as early as June.

“US shale oil producers have been for years taking advantage of OPEC+’s production cuts to enhance their market share at the expense of OPEC+ members by producing excessively even at a loss and undermining OPEC+ efforts to support oil prices by trying to cap them,” Dr. Salameh writes.

According to him, shale oil producers didn’t even spare a thought for other oil-producing nations of the world whose livelihood they have trampled on for years with the full knowledge that US taxpayers will bail them out even when their outstanding debts are heading towards $1 trillion.

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“Left to their own devices, US shale oil producers will continue producing even at a loss having learned nothing from the recent meltdown of the US shale oil industry,” wrote Dr. Salameh. He also said that the Covid-19 outbreak, with its destructive power, has proved irrevocably how inseparable oil and the global economy are as the destruction of one automatically destroys the other.

Dr. Salameh also wrote that China is bouncing back extremely quickly in all sectors with projections already abound that the country could grow at 6.8 percent in 2021 compared with 6.1 percent in 2019. Dr. Salameh had delivered an E-Lecture – Oil Markets in the Post-Pandemic World – organized on 29th April 2020, by TRENDS Research & Advisory.

“Given the speed by which China is bouncing back, it could be projected to grow at 4 percent-5 percent in the second half of this year compared with 3 percent-3.5 percent in the first half. Moreover, China will be hugely thirsty for crude oil,” he wrote. The economist claimed that, despite its catastrophic ordeal, the oil will continue to reign supreme throughout the 21st century and probably far beyond.

“And while the global oil demand will face a steep uphill struggle to recoup lost ground, it will start to recover its losses from the second half of this year with help from a China bouncing back extremely quickly from its ordeal with oil prices even hitting $40-$50 a barrel in the second half of this year and touching $50-$60 early next year,” he concluded.