Oil prices rebounded again on Monday, with WTI shooting up more than 3% to over $61 per barrel by noon ET.
Oil prices spiked to 13-month highs last week after the Texas Freeze, but prices sagged toward the latter part of the week. But on Monday, a new price rally began, with the price of WTI spiking $1.81 per barrel to $61.05. Brent shot up by $1.73 to $64.64.
The price hike comes shortly after Goldman Sachs forecast that oil prices would climb into the $70s over the next few months, and after it became clear that U.S. oil production and refineries will take a bit of time to resume their normal level of output after the Texas Freeze knocked out oil refineries and oil production.
One would think that the market’s enthusiasm for oil would be somewhat tempered given the moderately bearish news that OPEC+ heavyweights Saudi Arabia and Russia might be on the cusp of a disagreement again over the oil output agreement that the group is set to soon discuss.
As usual, Russia is eager to increase oil production, while Saudi Arabia believes a more cautious approach is warranted.
According to Goldman Sachs, Brent will hit $70 per barrel in Q2—this is a $10 increase from from its previous estimate.
The Texas Freeze knocked out as much as 4 million bpd of U.S. oil production and 6 million bpd of refining capacity last week, IHS Markit said. The production outages have created a tighter supply situation that has been absent for most of the pandemic.
And the market is latching onto that reality, sending WTI prices north of $61.
Oil prices are still below last week’s levels, but by just pennies.
WTIC option vol is near 50%. Never seen anything like this before. Some of the WOOM options, you need a war in the middle east just to break even.
The market must be REALLY worried about much higher prices. Maybe your prediction will finally happen.
If they can slow down fossil fuel production and get prices to soar much higher, it will make wind, solar and other alternative energy sources more competitive.
Very cheap fossil fuels means fossil fuels forever.
After slipping late on Tuesday after a surprise U.S. inventory build reported by the API, oil prices rose on Wednesday morning, supported by the slow restart of the U.S. oil production lost during the Texas Freeze and a weaker U.S. dollar.
Earlier on Wednesday, oil prices were struggling for direction, but firmed up in the morning Eastern Time after the U.S. dollar weakened.
Crude oil traded softer after reaching a fresh one-year high on Tuesday, after the API industry report contradicted surveys and reported the first rise in U.S. crude oil stockpiles in five weeks, Saxo Bank strategists said early on Wednesday, noting that both benchmarks are “still in overbought territory.”
“With US producers having restored around 80% of lost production after the Texas freeze, the focus will increasingly turn to the outcome of next week's OPEC+ meeting,” Saxo Bank said.
Many analysts have raised their oil price forecasts in recent days, expecting oil prices to rally into the summer amid an increasingly tighter market.
The Energy Information Administration reported Wednesday that U.S. crude inventories climbed by 1.3 million barrels for the week ended Feb. 19. That defied expectations for an average fall of 4.8 million barrels, according to a survey of analysts polled by S&P Global Platts. The American Petroleum Institute on Tuesday reported a roughly 1 million-barrel increase, according to sources. The EIA data also showed crude stocks at the Cushing, Okla., storage hub rose by 2.8 million barrels for the week. Meanwhile, the EIA said gasoline supply was "virtually unchanged," while distillate stockpiles were down 5 million barrels for the week. The S&P Global Platts survey had forecast supply declines of 2.8 million barrels for gasoline and 3.5 million barrels for distillate inventories. April West Texas Intermediate crude CLJ21, 2.38% climbed to fresh intraday highs after the data, trading up $1.57, or 2.6%, at $63.24 a barrel on the New York Mercantile Exchange. Prices were at $62.73 before the supply data.
Of course crude stocks went up slightly, with total inventory down 14 million barrels. 2.6 million barrels a day of refinery shutdowns on the Gulf Coast will do that. I wonder about who writes these articles with their "analysis".
thanks so much for pointing out that very relevant fact. I hadn't even looked/noticed!
Crude 3+ year chart below
Crude 7+ year chart below
Crude 12+ year chart below
Unleaded Gasoline Price Charts:
7 years........are we headed back to the highs?
Current gas prices.
Why are west coast gasoline prices higher?