Americas News
Oil Regains Upward Momentum As Some Analysts Predict $100 Per Barrel
Oil prices resumed their winning streak on Wednesday with gains in excess of 2 percent, this time based on data showing the extent to which production in Texas dropped due to the uncommon freezing weather conditions.
After it was learned from the Energy Information Administration that U.S. crude oil production dropped last week by more than 10 percent, or 1 million barrels per day (bpd), equalling the largest weekly fall ever, Brent rose $1.67, or 2.6 percent, to settle at $67.04 per barrel.
West Texas Intermediate ended $1.55, or 2.5 percent, higher at $63.22 per barrel; all told, crude prices have rallied about 30 percent since the start of 2021, due to ongoing supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and especially to the Covid vaccines, which are casing infection, hospitalization and death rates to plummet globally.
With regards to the U.S. production drops, Phil Flynn, senior market analyst at Price Futures Group Inc., said, “If you’re getting that kind of drop in one week of EIA production, you’re likely to get more after that.
“There is some concern that this will be a long-term permanent production drop.”
But presumably on a global scale, the loss will be countered by rising production elsewhere: on Thursday three OPEC sources told media an output increase of 500,000 bpd from April looked possible without building up inventories, although updated supply and demand balances that ministers will consider at their March 4 meeting will determine their decision.
One source said, “The oil price is definitely high and the market needs more oil to cool the prices down; a 500,000 bpd increase from April is an option - looks like a good one.”
Meanwhile, Apache Corp became another energy producer to report lower fourth-quarter losses as oil prices recover: it posted an adjusted loss of $20 million, or 5 cents per share, for the quarter ended Dec. 31, compared with a loss of $59 million, or 16 cents per share, in the prior quarter.
More news related to crude prices on Wednesday took the form of something not heard of since the advent of Covid: the prospect of $100 oil.
Socar Trading SA predicted that global benchmark Brent could hit triple digits in the next 18 to 24 months, and Bank of America saw potential spikes above $100 over the next few years on improving fundamentals and global stimulus.
The predictions were based on several factors, including demand bouncing back in key Asian markets, OPEC withholding barrels, and a lack of investment that is keeping shale supplies at bay.
