Crude oil prices, while have seen some profit taking, is headed for a fourth monthly rise for the month of February. February has seen nearly 20% gains and 28-29% gains for 2021.

Vikas Halan, Associate MD at Moody's Investors Service, said that they have revised their price expectations for both Brent as well as WTI.

“The prices have been much higher than what we expected. But if you look at our medium term price expectation of $45-65, the prices are not that far off. In fact last night we revised our price expectations for 2021 – the price that we use for our ratings from $25 Brent to $50 and we have increased WTI from $40 to $47."

"So the WTI Brent differential is now at $3 for 2021 in our expectations where it earlier was $5,” he said in an interview to CNBC-TV18.

Halan also said that the pandemic is not yet over and demand is still low. However, he said that currently the downside risks are not as high.

“We are still within the pandemic, it is not over yet. The demand is still very much down. The air travel is still curtailed and we are looking at a supply side which is artificially constrained. So it is not like other commodities where the supply has been constrained due to some supply chain issue, but here the supply has been constrained largely by OPEC and they are about to meet again on March 4 where we expect that there would be some moderation in the supply cuts.”

“At this point in time at $65 per barrel, the downside risks are not as high as what it was even back in October when we were talking at $37 per barrel prices and we were not as bearish. We were saying that this is an overreaction by the market because of the pandemic induced lockdowns that were coming in Europe. We are not going overboard with optimism, we are looking at this as a supply side issue and something that can be corrected very quickly,” he said.

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(Edited by : Bivekananda Biswas)