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After dipping late last month on expectations that the US would release crude oil from its Strategic Petroleum Reserve, oil prices have rebounded past the US$80 per barrel mark on indications that no reserves would be released at this time.
The recent OPEC + decision certainly hasn’t helped things. In a move that’s guaranteed to stick in the craw of anyone hoping for lower crude prices, the oil cartel ignored calls for additional production and stuck with its roadmap to increase global oil supply by just 400,000 barrels per day.
Brent crude is currently at US$82.43/bbl while the West Texas Intermediate is starting to eye the US$80/bbl resistance level at its current perch of US$78.88/bbl.
Reuters quoted a source as saying that all OPEC+ members were happy with where crude prices were at while another said it was looking to avoid another sharp drop in oil prices.
Crude prices had sunk into negative territory in April last year after a lack of storage in the US forced traders to pay buyers to take oil they could not store.
Further price increases likely?
So are further price increases likely?
The Bank of America continues to stick to its guns, saying that oil prices are likely to surge to more than US$100/bbl in the winter season due to an expected spike in demand.
Goldman Sachs is a little less bullish though it still thinks that Brent crude could hit US$90/bbl by the end of this year due to a faster than anticipated recovery in global demand.
It had also estimated that any release of oil from the US SPR would likely be limited to about 60 million barrels, which would shave off about US$3/bbl from its year-end forecast.
However, Fitch Solutions believes that prices will not break sustainably above US$80 per barrel.
“Despite the strong outlook for prices in early 2022, we expect supply growth to far outpace demand growth next year pushing prices lower as the year goes on, as OPEC+ cuts roll off and non-OPEC output continues to tick higher,” Rigzone quoted analysts from the research firm as saying.
Fitch added that while the outlook for global GDP growth remained positive, the momentum was slowing with the growth in 2022 expected to be about 4.2% compared to 5.7% this year.
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