Rapid Demand Recovery Hints At Even Higher Oil Prices | WHAT REALLY HAPPENED X-Frame-Options: SAMEORIGIN

Rapid Demand Recovery Hints At Even Higher Oil Prices

Brent prices hit a three-year high at $80 a barrel early on Tuesday, driven by recovering demand and a global energy supply crisis pushing up the use of oil and prices of fossil fuel commodities. The rally to $80—the first time Brent Crude prices have exceeded this mark since September 2018—may have legs for further upsides, analysts say.

Oil demand globally is recovering from the summer Delta variant spike faster than some observers had expected. Soaring prices of natural gas and coal in Europe and Asia are forcing more gas-to-oil switching at power generating units globally, further pushing up demand for oil.

On the supply side, Hurricane Ida disrupted production in the U.S. Gulf of Mexico, and some OPEC+ members are struggling to pump to the full capacity of their quotas. In addition, U.S. shale producers show remarkable never-seen-before discipline in drilling activity despite the fact that the U.S. benchmark, WTI Crude, has been trading above $60 a barrel for nearly six months—since the middle of April.

The global energy crisis and the recovery in oil demand after the July slump caused by the Delta variant are making investment banks, oil producers, and oil trading giants more bullish about oil prices in the coming quarters, especially in view of a muted supply response to the rise in demand.