Oil prices extended their gains to more than 2% during trading today, Friday, with US crude exceeding the $ 92 barrier, prices to continue their sharp gains, with cold weather spreading in large areas of the United States, which threatens to disrupt oil supplies further.
Yesterday, Thursday, oil prices ended their trading with gains of more than 2%, as US crude exceeded the level of $90 a barrel, for the first time in 7 years.
Oil Prices Today
The price of futures contracts for West Texas Intermediate crude – for March delivery – increased by 2.1%, recording 92.12 dollars per barrel.
The prices of Brent crude futures contracts – for delivery in April 2022 – also rose by 1.9%, recording $92.93 a barrel.
Both benchmark and US crude are heading towards achieving their seventh consecutive weekly gain.
“WTI crude rose above $90, after an explosion in the Arctic made its way into Texas and disrupted some oil production in the Permian Basin,” said Edward Moya, chief market analyst .
A severe winter storm swept the central and northeastern United States on Thursday, dumping heavy snow, making travel difficult if not impossible, leaving thousands without power and closing schools in several states.
Tight oil supplies pushed the 6-month market structure for WTI to a sharp default of $8.08 a barrel on Friday, 7 cents below an 8-year high of $8.15 on November 29.
A pullback occurs when spot trade prices are at a premium to future prices, and usually encourages traders to take oil out of storage.
Analysts said the recovery in demand is outstripping supply, and oil markets are increasingly vulnerable to supply disruptions.
“Even with thousands of flights canceled, the energy market is focused on production, and there aren’t many short-term demand shocks,” Moya added.
Geopolitical tensions in Eastern Europe and the Middle East have also boosted sharp oil gains that have pushed Brent and West Texas Intermediate futures contracts up about 18% and 21%, respectively, this year so far.
The United States warned that Russia was planning to use a premeditated attack as a justification for an invasion of Ukraine, and Russian President Vladimir Putin blamed NATO and the West for raising tensions, even as he moved thousands of troops close to the Ukrainian border.
“With the geopolitical risks in Ukraine and only the gradual increase in production by OPEC+, prices are expected to head towards $100 per barrel,” said Chuyuki Chin, senior analyst at Snowrad Trding.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies led by Russia, known as OPEC+, agreed on Wednesday to stick to moderate increases of 400,000 barrels per day in oil production.
This comes at a time when a number of member countries of the organization are struggling to meet current targets and despite pressure from major consumers to increase production more quickly.
But in the medium term, some analysts expect the oil market to turn into a surplus as soon as possible in the next quarter, helping to rein in the recent price hike.
“We expect the sequential trend of quarterly global equity drawdowns to shift to stock builds as early as Q222, and to continue over the next 15-18 months,” analysts at Citi Research said in a note late Thursday.
They added, “Our view is that the tight crude oil market turns into a surplus directly and in terms of covering demand days,” Reuters reported.