A surge in COVID-19 cases in the winter season will not derail the oil market rebalancing driven mainly by vaccine progress, Goldman Sachs said in a note, adding that it sees a further upside in Brent to $65 per barrel through 2021.
The bank, however, said it expects the winter wave to hit global oil demand by at least 3 million barrels per day, partially offset by heating, restocking and demand in emerging markets.
"We expect these muddied short-term fundamental signals and the opposite pulls of lockdowns vs. vaccines to keep oil prices volatile in coming weeks," Goldman Sachs said.
Both Brent and U.S. West Texas Intermediate (WTI) crude futures are set for a more than 20% rise in November, lifted by hopes that promising news surrounding vaccine efficacy rates will support fuel demand.
Markets now eye a meeting of Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia - the OPEC+ grouping - where they are largely expected to delay next year's planned increase in oil output amid a second COVID-19 wave.
"While we base-case a 3-month delay to prevent a return to a global oil surplus through 1Q21, not all producers appear onboard, with a lack of extension representing $5/bbl downside from current spot levels on our modeling, further contributing to short-term price gyrations," Goldman said.