The price of oil soared to $85 per barrel on Monday, as OPEC members continue to restrict supply despite growing global demand for crude as skyrocketing natural gas prices prompt gas-to-oil switching.
US benchmark WTI futures hit a high of $84 per barrel at the time of writing, while benchmark Brent crude soared to just above $86 per barrel on Monday morning, marking the highest since 2014, as the growing global energy crisis continues to send commodity prices accelerating.
The latest rally comes after Saudi Arabia informed its oil producers that the current jump in oil prices will subside, and that demand for crude could soon crash given growing uncertainty over the Covid-19 pandemic. “We are not yet out of the woods. We need to be careful. The crisis is contained but is not necessarily over,” Saudi Arabian Energy Minister Prince Abdulaziz bin Salman told Bloomberg TV.
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However, with natural gas prices repeatedly hitting new record-highs around the world— particularly in Europe, gas-to-oil switching has been on the rise, further contributing to the growing demand for crude just as economies reopen from the Covid-19 pandemic. As a result, Goldman Sachs forecasts that the acceleration in gas prices could boost oil demand by 1 million barrels per day, especially if there is an unseasonably cold winter in the months ahead.
Information for this briefing was found via Bloomberg and Goldman Sachs. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
