Oil at $100-Plus Is Near Certainty, Say Insiders As Crude Hits Sixth Weekly Gain

One analyst says it's also necessary for slowing down demand recovery: File Image/Pixabay

Seemingly invincible demand coupled with tight supplies and Russia poised to invade Ukraine were the familiar reasons for more oil price gains on Friday, as well as for the commodity achieving its sixth straight week of gains.

West Texas Intermediate rose 21 cents to settle at $86.82 per barrel, while Brent climbed 69 cents to settle at $90.03 per barrel; on a weekly basis, the benchmarks achieved their longest run of gains since October.

Given the factors driving oil, Mike Wirth, CEO of Chevron Corp., joined the chorus of insiders mulling over the possibility of a return to $100 oil, telling Bloomberg television that it “is certainly within the realm of what we could see in the next few months.”

He added that with regard to current geopolitical tensions, “A few years ago these types of events didn’t seem to really impact commodity markets, and today they seem to be doing so.”

Martijn Rats, chief commodity strategist at Morgan Stanley, said, “To balance the physical flow of oil over the course of 2022 — that [$100 per barrel] is what we need: we need a price that slows down this demand’s recovery, and that is a high price.”

Bank of America forecast that Brent crude will hit $120 by July and U.S. crude will hit $117, and Goldman Sachs sees Brent at $100 by the third quarter.

Another indicator of oil’s strength is that prices remain heavily backwardated: WTI’s prompt timespread on Friday was at $1.39 per barrel in backwardation, a 23 cent increase from the beginning of the month.

Plus, it was reported on Friday that analysts and oil company officials said crude imports in China, the world's biggest importer of the commodity, could rebound by a much as 7 percent this year.

Still, rallies are finite, and Matt Smith, director of commodity research at ClipperData, noted that the U.S.’s new-found softer rhetoric on Russia may have caused to "some of the air being let out of the tires on this crude rally.”

But he conceded, “the bigger picture here is that with all the geopolitical uncertainty and the supply side concerns, prices are continuing to just get swept along,"