Goldman Sachs and Energy Aspects predict $100 oil later this year: File Image/Pixabay
The latest session of the boom that seems to have legs saw oil prices soar to the highest level since 2014 on Tuesday, spurred not only by resilient demand but the expectation it will continue well into 2022 regardless of Covid.
West Texas Intermediate settled up $1.61 at $85.43 per barrel and Brent settled up
$1.03 to $87.51 per barrel after both the Organization of the Petroleum Exporting Countries (OPEC) and Goldman Sachs Group Inc. made bullish statements.
Goldman raised its Brent forecasts through 2022 and 2023 and predicted $100 oil in the third quarter, while OPEC in its latest monthly report said it expects global oil markets to remain "well-supported" this year by robust demand.
Ed Moya, senior market analyst, Oanda Corp
Energy traders are ready to pump up oil prices
Tuesday's trading was also said to be influenced by a drone attack on oil facilities in the United Arab Emirates, contributing to geopolitical risks that already include Russia stationing forces along the Ukraine border.
Ed Moya, senior market analyst for the Americas for Oanda Corp, remarked, "Oil was already vulnerable to price spikes as the market was tight before the recent wave of headlines.
"With optimism that the demand outlook is still going to improve, energy traders are ready to pump up oil prices."
Also, oil producers are eager to pump up output: according to the Energy Information Administration, crude supply from the Permian Basin, which includes Texas and New Mexico, averaged 4.92 million barrels per day last month, surpassing a previous record set in March of 2020.
Bloomberg noted that "Crude production from the Permian now exceeds that of each OPEC member except Saudi Arabia, underscoring its importance in balancing the oil market particularly at a time when global demand is set to exceed supply."
Amrita Sen, director of research at Energy Aspects, said that demand is so strong and refining margins are "very, very robust" that prices will continue to rise and possibly reach $100 per barrel.
Sen added that demand has been exacerbated by OPEC's production increases in reality only amounting to half of what the cartel announces, due to output problems.