Saturday, January 28, 2023
  • Submit news
  • Contact
  • DMCA
  • Cookie Privacy
  • Privacy Policy
  • Terms of Use
Oil Market News
  • Home
  • Marketdaily
  • Price
  • crudenow
  • Companies
  • politics
  • Gas
  • investing
  • Stock
  • OPEChot
  • brend
  • ships
Oil Market News
Home Market

How High Can Oil Really Go?

9 months ago
in Market
How High Can Oil Really Go?
Share on FacebookShare on Twitter


How High Can Oil Really Go? | OilPrice.com




















Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

By Irina Slav – Feb 25, 2021, 7:00 PM CST

Oil price revisions started cautiously: some banks saw Brent crude averaging $65 a barrel this year, and others, of a bolder nature, predicted that the oil benchmark could climb to $65 a barrel. Just a couple of months ago, these forecasts sounded pretty optimistic for the environment, given the slow rollout of Covid-19 vaccines, the continuing excess supply of oil, and reports of coronavirus variants emerging in different parts of the world, threatening new infection waves.

Now, banks and traders are talking about Brent at $100 a barrel. Of course, a big reason for this is the slump in U.S. oil production caused by the Texas Freeze earlier this month. It was even greater than the production decline prompted by the pandemic last year, and it will take a while to recover—if it ever does fully.

Yet demand has also been recovering steadily in some key markets, most notably in China. This recovery has largely offset slow-to-return demand for oil in other large consumers such as the United States and helped push prices higher.

Then, of course, there has been government stimulus poured into economies around the world in response to the crisis. Trillions of dollars have sunk into businesses and households in hopes this will help set GDP back on the growth path sooner rather than later. Once again, the U.S. has been crucial for the change in oil sentiment: oil price forecast revisions were quick to follow President Joe Biden’s proposal of a $1.9-trillion stimulus package.

The package is still being debated, and it might end up smaller than originally proposed. But when it comes to oil, it has done its job. Banks, the Fed, and the Treasury Department all expect a swift economic recovery due to this stimulus, and a swift recovery will invariably include a rebound in oil demand as people start traveling more.

Related: Bank Of America Expects Fastest Oil Price Rise In 30 Years

Meanwhile, global oil stocks are on the decline, even if not all the reasons for that are clear. The Wall Street Journal recently wrote an analysis of the so-called missing barrels, or barrels of oil that somehow slip under the radar of inventory trackers and that last year reached a record high of 68 percent of an estimate global inventory increase totaling 1.39 billion barrels. Outside the mystery of the missing barrels, OPEC+ efforts in production cutting have been fruitful, and U.S. shale producers have this time round been cautious about returning to a growth mode, not least because of oil prices.

In this context, it is not at all surprising that earlier this week that Bank of America, Socar Trading, and Energy Aspects all said Brent could rise to $100 over the next two years. According to Socar Trading—Azerbaijan’s oil marketing company—prices are up on the rebalancing fundamentals, and by the summer, Brent could hit $80 a barrel. As supply remains tight, it could climb further to $100 a barrel, the company’s chief trading officer Hayal Ahmadzada told Bloomberg.

Energy Aspects Amrita Sen, on the other hand, cited economic stimulus as chief reason for the expected price rally.

“It’s a futures market, we always discount stuff that’s going to happen in the future, now. That’s why prices are rallying right now,” Sen said, speaking on Bloomberg Surveillance. “We’ve always called for $80 plus oil in 2022. Maybe that is $100 now given how much liquidity there is in the system. I wouldn’t rule that out,” she added. Related: Natural Gas Production Plunged 45% During The Texas Freeze

Of course, the expectations of a demand rebound have yet to materialize outside China, and then there is the question of additional barrels coming soon from Saudi Arabia, maybe Russia, and likely Iran. With U.S. production still depressed, these may not affect prices right away. But a few million barrels daily more will certainly exert some pressure.

Then there is the latest from OPEC: the cartel is set to discuss a group increase in production in addition to Saudi Arabia removing its voluntary 1-million-bpd cut from March. The increase, however, will be modest, if agreed, at 500,000 bpd. This is the same amount of production OPEC+ brought back online in January, reducing its overall cut by 7.2 million bpd, excluding Saudi Arabia’s unilateral additional cut.

This means that come April, the group could be pumping 1.5 million bpd more than it is pumping now, and this is not including the possible return of Iranian barrels to the market. This may interfere with immediate price expectations, but by next year, the effects of underinvestment in new production will become more obvious, spurring prices higher.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:

Download The Free Oilprice App Today


Back to homepage




Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Related posts

  • 80% of investors end up losing money…
  • Learn how to navigate energy markets. Learn how energy insiders think.
  • Receive our cutting-edge 3-part investor education series for FREE
  • PLUS, get our Weekly Intelligence Report to stay one step ahead of the markets…

Latest Oil News

Chevron profits slip as oil and gas prices fall

Chevron profits slip as oil and gas prices fall

January 27, 2023
Big Oil’s cash bonanza | Financial Times

Big Oil’s cash bonanza | Financial Times

January 26, 2023
NYC pension schemes test support for climate action at bank meetings

NYC pension schemes test support for climate action at bank meetings

January 25, 2023
Oilfield services groups cheer ‘structural upcycle’ after highly profitable year

Oilfield services groups cheer ‘structural upcycle’ after highly profitable year

January 24, 2023



Published at Fri, 26 Feb 2021 01:00:00 +0000-How High Can Oil Really Go?

Previous Post

Sensex Ends 460 Pts Higher, Nifty50 Reclaims 17,550 As Market Cheers Rbi Policy;

Next Post

Nigerians Can Now Sue Shell In The UK For Oil Pollution

Related Posts

Chevron profits slip as oil and gas prices fall

Chevron profits slip as oil and gas prices fall

by Oil Market News
January 27, 2023
0

Chevron announced record earnings for 2022 but its fourth-quarter profits slipped from previous months in a sign that Big Oil’s...

Big Oil’s cash bonanza | Financial Times

Big Oil’s cash bonanza | Financial Times

by Oil Market News
January 26, 2023
0

This article is an on-site version of our Energy Source newsletter. Sign up here to get the newsletter sent straight to...

NYC pension schemes test support for climate action at bank meetings

NYC pension schemes test support for climate action at bank meetings

by Oil Market News
January 25, 2023
0

New York City has filed demands for tougher climate change action from US banks on behalf of retirement schemes worth...

Oilfield services groups cheer ‘structural upcycle’ after highly profitable year

Oilfield services groups cheer ‘structural upcycle’ after highly profitable year

by Oil Market News
January 24, 2023
0

The “Big Three” international oilfield services groups last year registered their most profitable 12 months since the heyday of the...

EU/diesel: loss of Russian imports supportive for independent refiners

EU/diesel: loss of Russian imports supportive for independent refiners

by Oil Market News
January 23, 2023
0

On the whole, the ban on Russian crude oil has worked well. It has lowered revenues for Russia without causing...

Dutch government aims to close Europe’s largest gasfield this year

Dutch government aims to close Europe’s largest gasfield this year

by Oil Market News
January 22, 2023
0

The Netherlands wants to close Europe’s largest gasfield this year because it is “very dangerous” to keep operating it, according...

Next Post
Nigerians Can Now Sue Shell In The UK For Oil Pollution

Nigerians Can Now Sue Shell In The UK For Oil Pollution

Subscribe
Notify of
guest
guest
0 Comments
Inline Feedbacks
View all comments

Trend Oil News

David John Wilson Buys 57,300 Shares of Kelt Exploration Ltd. (TSE:KEL) Stock

David John Wilson Buys 57,300 Shares of Kelt Exploration Ltd. (TSE:KEL) Stock

2 weeks ago
Saudi Arabia Sending Less Oil to China, More to Other Asia Nations

Saudi Arabia Sending Less Oil to China, More to Other Asia Nations

8 months ago
EU aims to limit gas price surges with latest emergency package

EU aims to limit gas price surges with latest emergency package

3 months ago
Granholm confirmed to lead agency key to Biden’s climate goals

Join the green transition or be left behind

9 months ago
BREAKING: Crude Oil Prices Fall by over 4% – Latest Tweet by The Spectator Index

BREAKING: Crude Oil Prices Fall by over 4% – Latest Tweet by The Spectator Index

4 weeks ago
ADVERTISEMENT
Bob Simpson’s TXO Energy goes public, soars 10% on first trading day

Bob Simpson’s TXO Energy goes public, soars 10% on first trading day

January 27, 2023

Internet of Things-as-a-Service to Enable Improved Opportunities

January 27, 2023

U.S. lawmakers ask Kerry to urge UAE to replace oil boss as COP28 president By

January 27, 2023

White House blasts Big Oil stock buybacks again as Chevron profits double

January 27, 2023

OPEC to Stay the Course on Oil Production Agreement; China’s Reopening Bullish for

January 27, 2023

Trinity To Spud Jacobin Well In Second Quarter Of 2023

January 27, 2023

Crude Oil

German Crude Oil Imports Rose 11% in 2022 As Crude Import Bill Doubles

German Crude Oil Imports Rose 11% in 2022 As Crude Import Bill Doubles

January 27, 2023
Europe Is Diversifying Its Diesel Sources Ahead Of Ban On Russian Fuel

Europe Is Diversifying Its Diesel Sources Ahead Of Ban On Russian Fuel

January 26, 2023
Opinion | Should the Strategic Petroleum Reserve Be Used Now?

Opinion | Should the Strategic Petroleum Reserve Be Used Now?

January 25, 2023
Rising Crude, Oil Products Inventories Weigh On Oil Prices

Rising Crude, Oil Products Inventories Weigh On Oil Prices

January 24, 2023

Investing

U.S. lawmakers ask Kerry to urge UAE to replace oil boss as COP28 president By

U.S. lawmakers ask Kerry to urge UAE to replace oil boss as COP28 president By

January 27, 2023
ESG Investing Fight Is Heating up in Kentucky and Could Cost Taxpayers

ESG Investing Fight Is Heating up in Kentucky and Could Cost Taxpayers

January 26, 2023
Chevron goes big with new $75 billion buyback, surpassing Exxon’s By Investing.com

Chevron goes big with new $75 billion buyback, surpassing Exxon’s By Investing.com

January 25, 2023
Oil falls $2/barrel on economic jitters, U.S. crude stock build By Reuters

Oil falls $2/barrel on economic jitters, U.S. crude stock build By Reuters

January 24, 2023

Market

Chevron profits slip as oil and gas prices fall

Chevron profits slip as oil and gas prices fall

January 27, 2023
Big Oil’s cash bonanza | Financial Times

Big Oil’s cash bonanza | Financial Times

January 26, 2023
NYC pension schemes test support for climate action at bank meetings

NYC pension schemes test support for climate action at bank meetings

January 25, 2023
Oilfield services groups cheer ‘structural upcycle’ after highly profitable year

Oilfield services groups cheer ‘structural upcycle’ after highly profitable year

January 24, 2023

OPEC

OPEC to Stay the Course on Oil Production Agreement; China’s Reopening Bullish for

OPEC to Stay the Course on Oil Production Agreement; China’s Reopening Bullish for

January 27, 2023
Biden vowed to punish Saudis over OPEC cut. That’s no longer the plan

Biden vowed to punish Saudis over OPEC cut. That’s no longer the plan

January 26, 2023
Oil Steadies as Traders Look to China, OPEC for Fresh Triggers

Oil Steadies as Traders Look to China, OPEC for Fresh Triggers

January 25, 2023
FG tasks 2023 OPEC’s President on attracting investments in oil

FG tasks 2023 OPEC’s President on attracting investments in oil

January 24, 2023
  • Submit news
  • Contact
  • DMCA
  • Cookie Privacy
  • Privacy Policy
  • Terms of Use

© 2022 OilMarket.News

No Result
View All Result
  • Home
  • Market
  • Price
  • crude
  • Companies
  • politics
  • Gas
  • investing
  • Stock
  • OPEC
  • brend
  • ships

© 2022 OilMarket.News

wpDiscuz
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.