by John S. Marshall

After a year of depressed prices and dramatic price swings oil industry, officials expect to ring out the old when clocks around the world strike midnight on New Year's Eve.

Though economies across the globe are still struggling with the devastating impact of the COVID-19 pandemic, analysts foresee oil prices will move modestly higher in the coming year.

The U.S. Energy Information Administration (EIA), which tracks and analyzes energy markets and prices for the government, predicted in its latest forecast that Brent crude oil prices, the international benchmark for oil prices, will average around 49 U.S. dollars per barrel in 2021.

"The forecast for higher crude oil prices next year reflects EIA's expectation that while inventories will remain high, they will decline with rising global oil demand and restrained OPEC oil production," EIA said in its December Short-Term Energy Outlook issued on Dec. 8.

The EIA's forecast price was well below the mid-60-dollar range Brent crude was going for in the first few days of 2020, but it is still an improvement over most of the year, especially when compared to the shocking plummet in prices in April when U.S. oil futures dropped below zero -- the first time in history.

On April 20, the West Texas Intermediate (WTI) for May delivery shed over 305 percent, to settle at -37.63 dollars a barrel on the New York Mercantile Exchange, implying that producers would pay buyers to take oil off their hands. The crash was fueled by pandemic-related demand shock and oversupply fears.

When the first economic lockdowns were put in place in the United States and around the world, airlines mostly stopped flights, industry ground to a near halt, and people stayed at home and stopped driving to work, or no longer had work to drive to.

Even before the lockdowns, oil prices were driven down when a supply deal between the Organization of the Petroleum Exporting Countries (OPEC) and its allies led by Russia, a group known as OPEC+, collapsed in March, sending oil prices to their lowest in two decades.

Although agreement was made by the groups in April to slash output by 9.7 million barrels per day (bpd) for May and June, analysts believed it was not enough to offset the pandemic shock.

"Oil prices should be a result of supply and demand but many times more heavily influenced by speculation by those who trade on the NYMEX and other exchanges that trade options and futures on the commodity," Richard Saxton, executive vice president of Connective Portfolio Management and a financial news commentator, told Xinhua.

"When COVID broke out and the economy was brought to a halt, the oil price plummeted," Saxton said. "Speculators piled on the belief that demand would disappear with an overwhelming supply producing a glut of oil. In other words, speculation overcame reality."

Since those dark and tumultuous days in the oil patch, crude oil prices eventually climbed higher, hitting the upper 40s dollars per barrel in early December, the highest levels since late March.

Helping to boost oil prices as winter weather sets in across the world is a growing confidence in COVID-19 vaccines. A renewed optimism spurred on by vaccines and over prospects of an improved world economy has prompted analysts at the economic and financial research firm Fitch Solutions to boost their oil price forecasts past the 50 dollars per barrel range for the coming year.

"This month we have revised our price forecast higher for 2021, with global growth rebounding on vaccine uptake and Covid-19 headwinds easing through the year, supporting an upward revision of our price expectation for the year to 53 dollars per barrel from 48 dollars per barrel forecast previously," Fitch analysts wrote in their recent oil price outlook.

Fitch believed the OPEC and OPEC+ countries will move to "support prices over Q1 2021," while also forecasting oil prices will post modest gains in 2022 through 2024.

The head of the Saudi Arabian Oil Company (Aramco), one of the world's biggest oil producing company, is also expressing optimism over a recovery in oil prices.

Aramco President and CEO Amin H. Nasser said recently at an industry event that he expects oil prices to rebound in the second half of 2021, noting the economies in China and other Asian countries are recovering.

"We are still in the tunnel, but I believe we can now see more light at the end of the tunnel," Nasser was quoted in Petroleum Economist, a monthly magazine that covers the oil industry.

Although there is uncertainty over the second coronavirus waves in Europe and the United States, "I believe the worst is behind us at this moment," Nasser said. Enditem