Oil prices continued to extend their multi-week rally amid constrained supply by major producers and growing fuel demand as economies struggled to recover from the Covid-19 pandemic. -19.
Brent crude oil price on the morning of October 11 in Vietnam time increased 1% to $ 83.20 / barrel, after gaining nearly 4% in the past week.
Notably, US light sweet crude (WTI) rose 1.15%, or 1.5%, to surpass $80 per barrel, after gaining 4.6% in the past week. At 80.87 USD/barrel today, WTI oil price is the highest since late 2014.
Along with other energies, oil prices rose as more and more people were vaccinated against Covid-19, helping economies gradually reopen, economic activity accordingly increased, fuel demand increased. increased, pushing the price of Brent oil up for 5 consecutive weeks, while US oil increased for 7 weeks without a break.
The US economy is recovering better than the rest of the world, with US oil consumption returning to pre-pandemic levels.
Coal and gas prices also rose as economies recovered, making oil prices more attractive (compared to the other two fuels) in power generation, adding upward pressure on oil prices. rough. Power plants run on gas, especially in Asia, and other gas consumers are turning to oil.
Meanwhile, oil supply remains limited. The Organization of the Petroleum Exporting Countries and its allies (OPEC+) have been very cautious in adding supply because of fears of a possible new oil price decline due to the looming Covid-19 waves readying. flare up again. In the latest meeting, OPEC+ still decided to increase monthly crude oil production by 400,000 bpd as expected, despite pressure from some major oil consumers and importers.
On the other hand, the oil output of some OPEC+ members did not meet the allocation quota due to a long time of not investing in exploitation activities. U.S. shale oil production has also not recovered enough to return to 2019 levels as investment in new wells slows.
Carsten Fritsch, commodities analyst at Commerzbank, said: “In view of the currently strong fuel demand, it is likely that oil prices are further boosted by the transition from gas to oil, plus by itself OPEC+ production curbs, the oil market will remain tight until the end of the year.”
Commerzbank raised its Brent crude oil price forecast for the current quarter to $85 per barrel from its previous forecast of $75, and raised its price forecast for the first quarter of 2022 from $70 to $75 per barrel.
Dan Eberhart, CEO of oilfield services provider Canary Dan Eberhart, argues that constrained supply and increased regulations from the Biden administration on the energy industry contribute to a ‘complete environment’. perfect for oil prices to rise further, with prices expected to rise to $100/barrel.
Even JPMorgan over the weekend forecast oil prices will be in the range of 150-200 USD / barrel next week due to a combination of “green inflation”, or the shift to clean energy, supply chain problems caused by pandemic and geopolitical tensions between OPEC+, Russia and Iran.
Existing energy prices would not “have a significant negative impact on the economy,” JPMorgan said, noting that the economy and consumers had “performed well” when oil prices averaged $100 a year. barrels in the period 2010 to 2015.
According to the bank’s experts, oil prices could reach $130 to $150 a barrel before the stock market and economy begin to fluctuate. Yields on 10-year US Treasuries would have to hit 2.5% or 3%, up 100-150 basis points from current levels, if anything higher than that becomes a problem.
However, data from Baker Hughes on October 8 showed that the number of US oil rigs increased for the fifth consecutive week, adding 5 rigs to 433 last week, suggesting that the country’s oil production is about to accelerate again. With oil inventories in the US starting to grow again, some think oil prices may start to level off.
U.S. crude stockpiles rose for a second straight week through the past week, as production rebounded after a prolonged shutdown caused by hurricanes.
“We think crude prices are unlikely to move much higher this quarter and still forecast them to taper off next year,” said Caroline Bain, chief commodities economist at Capital Economics.
Also related to increased supply, Saudi Arabia has agreed to supply more crude oil to at least two customers in North Asia in November, while also meeting enough contract volume for three other customers, Reuters cited a source. well informed.
Accordingly, Saudi Aramco – Saudi Arabia’s state-owned oil company – said that the world’s top oil exporter has supplied all of its crude oil to Asia despite limiting output to comply with the treaty. of OPEC+.
Saudi Aramco also announced a reduction in the price of its crude oil sold to Asia in November, the second consecutive month of decline, with a slightly larger-than-expected drop – a sign that it wants to remain competitive. as Middle Eastern producers increase output at the end of the year. Some buyers decided to buy more Saudi Arabian oil because November prices were very attractive.
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