The US oil price tops the $ 90 barrel for the first time since 2014
A pump jack at an oil well and fracking site in the cotton field in Shafter. Kern County
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US oil passed over $ 90 on Thursday for the first time since 2014 as demand for petroleum products increases while supply remains limited.
West Texas Intermediate crude futures, the US oil reference, increased by more than 2% to trade as high as $ 90.23 per barrel. The last time prices were above the $ 90 mark was in October 201[ads1]4. International benchmark Brent oil rose 1.7% to trade at $ 91. Brent topped $ 90 on January 26th.
Oil has risen sharply since falling to record lows in April 2020 – WTI traded short in negative territory – as demand has returned, but producers have kept supply in check. Geopolitical tensions between Russia and Ukraine as well as in the Middle East have also sent unrest in the market.
WTI is up almost 20% for the year, building on 2021s more than 50% gain. As oil prices rise, a number of Wall Street analysts have predicted $ 100 oil.
Oanda’s Ed Moya added that part of Thursday’s promotion is due to cold temperatures and a potential drop in production.
“The oil market is so tight that any shock to production will cause prices to skyrocket. OPEC + production is on cruise control with their gradual increase strategy, which means that oil looks set to go towards $ 100 oil soon,” he said.
On Wednesday, OPEC and its oil-producing allies, a group known as OPEC +, decided to stick to a previously announced schedule and increase March production by 400,000 barrels per day. The move comes as the group has faced pressure, including from the US, to increase production in an attempt to alleviate the rapid rise in oil prices.
“The market is still positive on oil prices, as it has been since May 2020 when OPEC + adopted mega-cuts in production that brought oil from negative territory to a fairly reasonable jump away from $ 100 per barrel,” said Louise Dickson, senior oil market analyst at Rystad Energi.
“The prevailing expectation is that the market, despite some downward fears caused by pandemic demand fears, will continue to trade high on oil as there is a real shortage of supply in both the short and long term,” she added.
Again, Capital’s John Kilduff said that a fall in the dollar on Thursday contributed to the oil jump higher. As the dollar advances, it makes oil more expensive for foreign buyers.
“Today’s sharp fall in the US dollar was the catalyst needed to stop sales emerging in the wake of the OPEC + meeting and some recent weak economic data,” he said.
Kilduff added that although the $ 100 mark “seems inevitable”, it “will not be easy.” He noted that the offer is returning to the market, saying that China’s economic struggles could be another headwind.
