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Oil price rises above $80.00 a barrel
- How is the oil market doing right now?
- How was it doing in the past few years?
- Is the oil market at its all-time high?
- Until when is this rise going to sustain?
- How is the oil market doing right now?
The price of crude oil has risen by nearly 55 percent so far this year, after Tuesday's hike, as Brent, the international benchmark, rose to $80.19 a barrel(0.8 per cent) during the Asian trading on Tuesday.
The global output disruptions made energy companies soften crude oil prices, drawing more crude oil out of their inventories. The International crude oil prices have reached a nearly three years high after this.
The prices of Crude oil are also rising in China with the rise of 27 % in Shanghai crude oil futures
Meanwhile, Britain fuel supply crisis is partly due to a shortage of transport drainers - the stations were depleted after drivers queued up for gasoline and panicked one after another.
- How was it doing in the past few years?
Many different reasons have led to an oil crisis in the past. The first oil crisis occurred in 1973. As recently as October 2018, crude oil prices saw gains before reversing those gains and falling into negative territory.
After falling hugely in response to the COVID-19 pandemic in 2020, crude oil prices have risen above 2019 levels.
- Is the oil market at its all-time high?
Crude oil prices hit a record high of $76.67 per barrel before falling as well. After losing 0.21% on the day, the contract finished at $75.29 per barrel. Brent and WTI both gained more than 50% in 2021 after having risen for five straight weeks.
OECD inventories for the year are expected to end at the lowest level in decades due to the determined shortage of supply.
- Until when is this rise going to sustain?
Global demand will continue to outperform supply, which will cause oil prices to stay tied for the foreseeable future. Investment banks predict that Brent will reach $90.00 by the end of the year.
It is expected that the crude oil crisis will be over within 18 months, or even sooner. Moreover, the current oil boom could be the last of its kind. The oil market system continues to become more flexible, with both supply and demand more elastic than in the past, making booms less likely to happen. And even if they do occur, peak prices are likely to be lower.
Thanks for Reading!
Shubham Agarwal (CFA L2 Candidate | MBA candidate at University of Cambridge, UK)
Want to discuss this further or have questions regarding finance/strategy? Feel free to connect here - https://www.linkedin.com/in/shubhamagarwal13/
