Oil, arguably one of most important commodities in the world, is vital for understanding the global economy. The price for any commodity is driven through the intersection between consumer demand and production supply, so we can effectively use the price of oil to understand complications in consumer/producer dynamics.
We use oil for everything; for transportation, industry, agricultural, and residential needs. The transportation industry is the greatest consumer of oil by far, at 68% use in all transportation needs for the US and 56% globally.
However, with the onset of the novel coronavirus pandemic in 2020, global transportation demand has fallen as fewer people travel both domestically and abroad. An oil price war between Saudi Arabia and Russia during 2020 also caused production stressors. These supply and demand shocks significantly dropped the price of US oil to under $40/barrel in early September 2020.
The US Energy Information Association (EIA) has published its 2021 predictions:
“The U.S. Energy Information Administration (EIA) expects that Brent prices will average $49/b in 2021, up from an expected average of $43/b in the fourth quarter of 2020. 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 forecasts Brent prices will average $47/b in the first quarter of 2021 and rise to an average of $50/b by the fourth quarter.”