Oil continues to rise, reaching a new seven-year high of over $ 92 a barrel and almost every indicator indicates that the rally will continue, according to Bloomberg.
Oil is trading at its strongest level in recent years, suggesting reduced supply.
Diesel is also being launched due to a cold snap that is hitting the US and boosting demand. Stocks in key storage nodes are declining and vital price indices suggest that tightness will be maintained.
Traders are increasingly believing that demand is underestimating as economies emerge from the crisis that has plunged them into a coronavirus pandemic.
Saudi Arabia’s state-owned oil company said late last month that consumption would soon return to pre-pandemic levels, although International Energy Agency figures show consumption of about 1 million barrels a day lower in the first quarter. compared to the same period in 2019.
Meanwhile, power outages from Libya to Ecuador and Nigeria have limited WTI production.
There is still a growing risk posed by the concentration of Russian troops on Ukraine’s border, although President Vladimir Putin has said his country has no plans to invade.
“This market is extremely tight,” said Gary Ross, a veteran oil consultant who became hedge fund manager at Black Gold Investors LLC. “We have low stocks, tight balances, large profit margins, geopolitical risk. This is a very upward market.”
All of this comes as OPEC + strives to increase production by 400,000 barrels a day each month. In January, its 13 members added just 50,000 barrels a day, fueling traders’ concerns that the market reserve stock is shrinking.
The rally means that the return of oil to $ 100 is becoming more and more probable day by day. For months, options markets have been flooded with contract trades above this level.
There are nearly 112 million barrels worth of $ 100 calls for the Brent global benchmark for the next 12 months. Options sold by banks at $ 90 are also likely to contribute to the upward movement of oil.
On Friday, contract prices rose again, rising 1.8% to $ 92.91 on Brent, while West Texas Intermediate rose 1.86% to $ 92.13. The latter is up about 6% this week.
Source: Capital
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