- Will crude oil prices continue their recent dramatic boom as the pandemic recovery takes hold? Perhaps not.
- Some analysts are expecting crude prices to surge near $100 per barrel as coronavirus lockdowns end and travel resumes.
- But the IEA, which monitors energy market trends for the world’s richest countries, thinks there is too much oil sloshing around global markets for a supercycle to take hold.
A recent news article published in the CNN written by Charles Riley analyze about the rising crude oil price and new supercycle.
The International Energy Agency
The International Energy Agency said Wednesday that it does not expect oil to enter a “supercycle,” or extended period during which prices rise well above their long-run trend.
“Oil’s sharp rally to near $70 per barrel has spurred talk of a new supercycle and a looming supply shortfall. Our data and analysis suggest otherwise,” the IEA said in its latest monthly report.
Situation in last year
Last year, OPEC+ slashed output by a record-shattering 9.7 million barrels per day. The emergency steps, along with production cuts by US and other producers, drove a strong rebound in prices.
That recovery has accelerated in recent months as millions of people around the world have been vaccinated against Covid, allowing restrictions to be slowly eased.
Crude futures have now recovered all the ground lost during the early months of the pandemic.
Brent crude, the global benchmark, was trading at $67.68 on Wednesday. US oil prices were above $64.36, a far cry from last April’s record low.
IEA expectation
The IEA expects the cuts carried out by OPEC+ will reduce inventories. But not just yet.
“The prospect of stronger demand and continued OPEC+ production restraint point to a sharp decline in inventories during the second half of the year. For now, however, there is more than enough oil in tanks and under the ground to keep global oil markets adequately supplied,” the IEA said in its report.
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Source: CNN
