International oil prices continued to rise strongly after opening on Monday, continuing the astonishing gains of the past few weeks. U.S. WTI crude oil hit a seven-year high again during the day, and Brent crude oil rose strongly above the US$86 mark. Previously, OPEC oil-producing countries, led by Saudi Arabia, continued to be cautious about increasing production last weekend, and more and more industry insiders now expect that the era of low oil prices is likely to be gone forever.
Market data shows that the price of international benchmark Brent crude oil futures rose further by 0.7% in early Asian trading on Monday, hitting a three-year high of US$86.30. Previously, Brent oil prices had risen for seven consecutive years. Weekly rise. U.S. West Texas Intermediate (WTI) crude oil rose more than 1% during the day, hitting its highest point since October 2014 at $84.70.
Saudi Energy Minister Prince Abdulaziz bin Salman (Prince Abdulaziz bin Salman) weekend In an interview, he said that oil-producing countries should not take rising oil prices for granted because the epidemic may still hit demand. Salman said, “We are not out of the woods yet. Although the crisis is under control, it is not over.”
This conservative stance was echoed by Nigeria and Azerbaijan. Timipre Sylva, Nigeria’s Minister of Petroleum Resources, also said over the weekend that oil demand is still very fragile and OPEC+ should not change its plan to increase production by 400,000 barrels per day per month.
OPEC+ will hold a meeting on November 4, when member states will decide whether to continue to increase production according to the original plan, or to accelerate oil production as oil prices rise.
Oil prices have more than doubled in the past 12 months as the global economy recovers from the disruption caused by the coronavirus pandemic. However, despite the surge in oil consumption, OPEC and its allies have been restrained in withdrawing from the tough production cuts implemented last year to save oil prices. This has helped push Brent crude oil prices to their highest levels since 2018, and crude oil inventories have plummeted in many places around the world.
Warren Patterson, head of commodities strategy at ING Groep NV in Singapore, said, “The Saudi comments reinforce the view that OPEC+ will stick to its cautious approach as demand Improvement, this does mean that the market will continue to tighten for the rest of the year. So this will definitely bring the risk of further market volatility.”
Wall Street investment banks have raised their oil price forecasts
The era of “cheap” oil supply may be gone forever – this is the case for many large Wall Street companies That’s the conclusion reached by the investment bank’s commodities arm. Recently, many institutions have been raising their long-term price expectations for oil prices, with price adjustments generally reaching double digits.
Although the U.S. shale gas boom in the past few years has brought about the slogan of “long-term low oil prices,” the energy market is now dominated by climate change issues and investment fossils. Declining interest in fuel. Instead of increasing supply, oil companies are under pressure to limit spending, leading to a structural underinvestment in new production, leading a growing number of industry insiders to expect oil prices to continue higher for longer.
Jeff Currie, head of commodity research at Goldman Sachs Group, said, “My advice to clients is that you can still be long oil for now until you find where the price equilibrium point is. The equilibrium price will bring in new supply, and we know it is above current levels because our capital expenditures and investments are not rising significantly.”
In anticipation of higher oil prices lasting longer Among investment banks, Goldman Sachs expects oil prices to be at $85 in 2023; Morgan Stanley last week raised its long-term forecast by $10 to $70, while BNP Paribas expects crude oil prices to be close to $80 in 2023.
Other banks, including RBC Capital Markets, have said oil is at the beginning of a structural bull market.
These price estimates suggest that crude oil, a commodity vital to the global economy, has become structurally more expensive. Oil price expectations will also affect hundreds of billions of dollars in stock valuations for major international oil companies such as Royal Dutch Shell Plc and BP Plc.
Of course, not everyone agrees with the idea that oil prices are likely to remain high for a long time. Citigroup Inc. said in a report this month that crude oil prices below $30 and above $60 are unsustainable in the long term. Analysts at the bank, including Ed Morse, wrote in a note that a prolonged oil price above $50 could bring an additional 7 million barrels per day of supply. They pointed out that in the medium term, cost indicators have been pointing to a fair value range for oil prices of US$40-55 per barrel.
Is the crude oil market likely to be in short supply?
But others see a shifting trend, especially given changing attitudes in the U.S. shale industry, which has effectively become a wavering producer in recent years.
On the one hand, listed US shale oil companies are still subject to various “hidden” restrictions on production growth. EOG Resources Inc. When it said it planned to increase production in February, its stock price fell the most among S&P 500 companies.�most. Since then, few manufacturers have made similar statements.
At the same time, the impact of declining oil field production has become increasingly apparent. In November last year, the Permian Basin was the only oil field onshore in the United States to see a significant year-on-year increase in production. Production from other fields was either flat or declining, according to a report from the Energy Information Administration.
Similarly, while some major OPEC+ producers have found themselves with spare capacity that could be tapped next year, others including Nigeria and Angola have shown difficulty in further Signs of increased production.
The International Energy Agency (IEA) said earlier this month that if current demand continues to grow, investment spending on fossil fuels will will not be able to meet demand. The agency predicts that under current policies, oil demand will not begin to decline until the 2030s.
Morgan Stanley predicts that oil supply may stop expanding by 2025, leaving a sizable gap. Martijn Rats, an analyst at the bank, said that in the next ten years, oil demand will exceed 100 million barrels per day, but on the supply side, supply will not be able to meet demand at current spending levels. </p
