Middle East

Oil hits a high for the first time in seven years

Oil prices soared to a seven-year high on Friday, rising due to continued concerns about supply turmoil caused by the cold weather in the United States and ongoing political turmoil among the world’s major producers. Was extended to the 7th week.

Brent crude rose $ 2.16 (2.4%) to settle at $ 93.27, the highest since October 2014 at $ 93.70.

US West Texas Intermediate Crude Oil closed at $ 92.31 a barrel, up $ 2.04 (2.3%), after trading at a high of $ 93.17, the highest since September 2014.

Brent finished the week 3.6% higher, but WTI recorded a 6.3% rise in its longest rally since October.

The market surge has accelerated over the last two days as buyers have built up crude oil contracts in anticipation that global suppliers will continue to struggle to meet demand.

Despite the presence of the Omicron variant of the coronavirus, US employment numbers were surprisingly strong in January.

Crude oil prices, which have already risen by about 20% so far this year, are likely to exceed $ 100 per barrel due to strong global demand, according to market strategists.

Reflecting its bullish view, Money Managers raised Netlong US Crude Oil Futures and Options positions to 304,013 with 6,616 contracts for the week ending February 1st, according to the US Commodity Futures Trading Commission (CFTC). rice field.

However, some people are aware of the risks to the rally. Citi Research said it expects the oil market to turn into the black as soon as the next quarter, putting a brake on recovery.

“In the short term, the surge to $ 100 in crude oil should not be ruled out, but the slump in demand for Omicron, concerns about economic growth, and central bank inflation,” said Björner Tonhaugen, head of risk energy. There is a great downside risk, such as financial market adjustments during the fight. ” Of the oil market.

Winter storms that bring icy conditions in the United States, especially Texas, have fueled supply concerns, as production could be temporarily halted due to extreme cold, similar to what happened in the state a year ago. rice field.

With the supply of tight oil, WTI’s six-month market structure plunged $ 9.06 a barrel on Friday, the largest since September 2013.

Backwardation exists when the price of a short-term delivery contract is higher than that of a later-month contract. This reflects short-term demand that encourages traders to free oil from storage and sell it quickly.

According to energy services company Baker Hughes, the number of U.S. oil rigs, an early indicator of future production, increased by two this week to 497, the highest since April 2020. ..

The number of oil rigs has reached record increases for the 17th consecutive month, but weekly increases are almost in the single digits, with many companies focusing on investor returns rather than investor returns. Production is still far from record highs before the pandemic. output.

The oil market is also favored by geopolitical risks as Russia, a major oil producer, has gathered thousands of troops on the Ukrainian border and accused it of tensions instigating the United States and its allies.

Russia-led Organization of Petroleum Exporting Countries and its allies (OPEC +) have agreed this week to stick to a modest increase in production. The group is already struggling to reach its existing goals and is under pressure from top consumers to increase production more quickly.

Iraq, OPEC’s second-largest oil producer, fell significantly below OPEC +’s quota in January, while OPEC + member Kazakhstan has domestically responded to rising fuel prices. We want to maintain more oil production.

(Reuters-Report by Stephanie Kelly and Marcy de Luna, Additional Report by Rowena Edwards and Rossan Khasawneh, Edited by David Goodman and Marguerita Choy)

https://www.oedigital.com/news/494058-oil-hits-seven-year-high Oil hits a high for the first time in seven years

Back to top button