During the day, oil prices rose 1.5% to $ 80.52. The last time oil closed above $ 80 was on October 31, 2014.
High gas prices will only boost high inflation, squeeze the budgets of American families and hurt President Joe Biden’s political wealth.
“It’s just trying to turn on the light,” said Matt Smith, Kpler’s leading U.S. oil analyst. “It creates a demand that doesn’t really exist at all.”
Are there $ 100 worth of oil on the cards?
Citigroup on Monday raised its Brent oil forecast for the fourth quarter to $ 85 and said crude oil would sometimes reach $ 90. The Wall Street Bank has been waiting for “prices to catch up this winter” and for power plants to switch from natural gas, which is high in the sky, to oil.
Citi added that “a very cold winter” could see Europe “running out of gas” by February.
Oil has long existed as a potential substitute for natural gas – except recently, it has no financial significance. This is due to the fact that natural gas prices have been very low for most of the last decade, and the transition to oil is economically unsatisfactory.
Bank of America has warned that a cold winter could increase Brent oil demand by half a million barrels a day by raising it to $ 100 a barrel. This, in turn, would cause more etiquette shock for American drivers, as the price of gas is lower than the price of Brent oil.
Bank of America strategists wrote to customers in their latest notes that “we may be one storm away from the next macro hurricane.”
Record coal prices in China
It is not only high gas prices that play a role here.
Against this background, gasoline prices have risen sharply in the United States, leading to inflationary pressures on the economy.
Patrick De Haan, head of gas analysis at GasBuddy, said gas prices of $ 3.30 were likely to be very close across the country.
“Looking at the horizon, I don’t really see prices falling in an organized way,” De Haan said. “The market is starting to feel explosive. There are reasons to continue.”
OPEC in the driver’s seat
Although demand was strong, oil supplies simply did not keep pace.
U.S. oil production has slowly returned from Covid – even as prices have risen. Many U.S. oil companies are struggling to re-supply the market and are focusing more on returning cash to shareholders who have lost money over the past decade.
Despite calls from the White House for OPEC and its allies to significantly increase production, the group only gradually increased production in early 2020. For now, they seem happy to allow oil prices to rise.
Kpler’s Smith said: “They’ve always been swing makers, but damn, of course they’re in power now.”