Thursday, September 21

Oil touches 8-year highs with the prospect of becoming more expensive

The escalation of oil prices does not let up. The barrel of Brent, a benchmark in Europe, approached 86 dollars on Monday, reaching a maximum of 2014, after closing four consecutive weeks higher on Friday.

For its part, Texas crude (the reference in the United States) is close to 84 dollars per barrel, approaching a multi-year maximum reached in October 2021.

Prices increase despite the publication of bad macroeconomic data in China.

“Investors ignore a possible blow to oil demand dealt by omicron”

Sergio Ávila, analyst at IG Markets

Oil rises despite bad data from China

Specifically, the world’s second-largest economy grew 4 percent from October to December, the weakest pace of expansion since the second quarter of 2020, prompting the country’s central bank to cut its interest rate for the first time. in almost two years.

Crude rose, too, even after China recently agreed with the United States to release oil from its strategic reserves around the Lunar New Year, in a bid by major consuming countries to lower liquid gold prices.

And it is that, as a whole, the black gold already scores a revaluation of more than 10 percent so far this year, in part due to OPEC supply interruptions.

Stronger-than-expected oil demand

It also benefits from the fact that the International Energy Agency (IEA) said last week that demand is proving more resilient than expected during the fifth wave of the Covid-19 pandemic.

And it seems that the raw material has wickers to keep the good streak going.

“The uptrend in oil prices shows no signs of slowing, continuing to trend higher amid concerns about tight oil markets.”

“Increasing OPEC Cuts and Geopolitical Threats Support Bullish Oil Sentiment”

Vandana Hari, fundador de Vanda Insights

“In this way, investors have ignored a possible blow to fuel demand caused by the expansion of the omicron variant of Covid-19,” explains Sergio Ávila, market analyst at IG Markets.

And this trend shows no signs of turning around, in the opinion of this expert: “In general, a strong recovery in demand is expected to continue supporting crude oil prices in the future.”

Bullish sentiment in oil remains

For her part, Vandana Hari, founder of Singapore-based Vanda Insights, pointed in the same direction.

“Oil has left the last wave of Covid-19 far behind. Increasing OPEC supply cuts relative to the agreed target and growing geopolitical threats to supply are supporting the bullish sentiment for the commodity,” Hari explained to Bloomberg.

Although Ávila also warned that “such high prices for black gold also increase the risk of political intervention.”

Similar reflections writes Norbert Rücker, an expert at Julius Baer.

“We see oil in a transition phase in which production exceeds demand growth”

Norbert Rücker, analyst at Julius Baer

“The decision of the oil producing nations to maintain their roadmap to lift supply restrictions; as well as the view of market tightness support current market sentiment.”

Although Rücker adds a doubt about the long-term horizon.

“We see the oil market in a transition phase where production growth outpaces demand growth as the post-pandemic recovery has largely run its course.”

“We see long-term price headwinds, but recognize that tailwinds could prevail in the very short term.”