Oil prices keep rallying.
Mario Tama/Getty ImagesOil has been on a hot streak of late—and it just keeps going.
The price of WTI Crude oil is up more than 11% in the past month, hitting new multiyear highs in the last few days. The gain for the year is just above 50%, reflecting an economic recovery that is in full swing. Not even the Federal Reserve’s hawkish tilt last week stood in the way of oil’s rise.
While the burst of economic demand is well understood, supply and demand dynamics have more recently further supported oil’s run. On Wednesday, data from the Energy Information Administration showed that production had fallen almost 1% week-over-week for the week ended Jun 18, while gasoline demand rose 1%.
That continues a larger trend, one that saw U.S. Gulf crude inventories fall a bit more than 6% to 280 million barrels from March to the end of May, according to RBC Capital Markets data. In that time, gasoline demand has increased to over 9 million barrels a day, a level not seen since the first half of last year. “US oil inventories are tight,” writes Michael Tran, RBC analyst, who added that “rebounding demand” has also driven the price.
Not everything is perfect. OPEC, which meets next week, is reportedly considering boosting production by 500,000 barrels a day, according to The Wall Street Journal. Still, WTI Crude oil prices were up 1%, to $73.59, on Wednesday, near its highest level since 2018.
Still, as long as there’s demand to meet the supply, oil prices are likely heading higher.
Write to Jacob Sonenshine at jacob.sonenshine@barrons.com
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June 24, 2021 at 12:02AM
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Oil Prices Keep Rising. Here's Why. - Barron's
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