The price of oil rose to its highest level in three years. The analyst cites a lack of wind and gas as the cause.
On Friday night, the price of a barrel of North Sea oil was over $78. This is the highest oil price has been since October 2018, three years ago.
The rise in oil prices comes on the heels of other energy sources that have strengthened strongly this year.
E24 previously wrote that coal prices tripled this year, while gas prices are very high.
In the past month, oil prices rose sharply. From a low of $65 in mid-August, oil prices have risen by as much as 20 percent.
Recovery comes while US oil stocks fall more than expectedThe number of active oil rigs in the United States continues to rise for the third week in a row, according to the rig count. Baker Hughes. Rig activity has rebounded in line with the catch-up after Hurricane Ida, which hit production in the Gulf of Mexico nearly four weeks ago.
Psychological boundaries can be broken
— It’s high, says Nadia Wiggin, partner and energy analyst at Barreto.
She points to $80 as a psychological limit to recent oil prices. Despite the strong recovery in oil demand this summer, the price did not break this limit, but rather remained at the “healthy level” of the market.
Wiggin said the price of oil hasn’t exceeded $80 since 2018, when Trump talked about imposing sanctions on Iran.
Now, however, oil prices are on the rise after many countries reopened from lockdown due to Corona, according to the analyst.
– The power supply is not keeping up at the moment. There is a tight market for coal and gas, with European gas stocks below the five-year average and low export volumes from Russia. Additionally, oil stocks are below the five-year average, and whatever was saved under corona is now exhausted, Wiggin says.
She believes that this could enable the price of oil to break the $80 per barrel barrier.
Oil can have unexpected uses
The weather has a huge impact on what happens, but the oil could eventually be used to generate electricity, and the market didn’t fully anticipate that. The market is trying to phase out oil-based energy production, but without enough wind and gas, oil would be attractive, because oil is cheaper than gas and coal, Wiggin says.
Pareto’s target price for North Sea oil is $75 a barrel next year, with prices rising at the start of the year, but Wiggin says they are now considering raising their target price for the fourth quarter of this year.
This is partly due to the tight gas market, and the fact that half a million barrels of oil per day could then be used to produce energy in the future. We also saw this earlier this year, like the Swedes The power plant was set on fire In Karlshamn to secure the energy source.
There is also an OPEC meeting on October 4, and they planned to increase production per month by 400,000 barrels of oil per day, but they may need to produce more, especially in the first quarter of next year, to keep pace with demand. In addition, the cartel is under pressure from China to produce more, since last week China began releasing oil from its strategic petroleum reserves, previously used only in crises, Wijen says.
Sanctions on Iran drove up oil prices last time
The last time the price was as high as it is today was when Trump imposed sanctions on Iran in 2018.
Fears of a significant loss of Iranian oil and pressure on oil drove oil prices higher and higher throughout the fall, culminating in early October when oil prices soared. Appeared over $85 a barrel.
The price fell again only when OPEC and a number of partner countries decided to increase production. At the same time, the United States ended up allowing Iran to export oil to certain countries when oil prices skyrocketed.
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