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Encouraging environment for black gold…
(Boursier.com) — Up more than 10% since January 1, the barrel of Brent is moving to its highest since the end of 2014, above $86 in London, at $86.61 on Monday evening (+0.6%) for the March futures contract. The price of US light crude WTI gained for its part 0.6% to $ 84.30 (February contract).
In addition to a lesser impact of the coronavirus pandemic on fuel demand, despite the surge in contamination with the Omicron variant, the barrel of oil has also been supported for several weeks by the operating difficulties encountered by several major producing countries. “We see that some of the major producers including Nigeria, Libya and also Ecuador are experiencing severe disruptions in terms of supply”, explained last week Fatih Birol, executive director of the IEA.
“There is a real belief that physical demand will continue to outstrip supply,” Tamas Varga, an analyst at PVM Oil Associates Ltd, told Bloomberg. “On the demand side, the cold winter in North America is one of the main factors. Mild symptoms for Omicron variant infected and hope that the rapid increase in cases is about to continue. mitigate also contributed to the vigor (note: crude)”.
“Bullish sentiment continues as (the producer group) OPEC+ is not providing enough supply to meet strong global demand,” Toshitaka Tazawa, an analyst at Fujitomi Securities, told Reuters. The cartel and its allies are gradually easing production cuts implemented when demand for black gold collapsed in 2020. But, given a lack of investment, many small producers cannot increase production. supply and others are reluctant to put too much oil back into a wobbly market.
In addition, the Covid-Zero policy employed by China will likely ensure that there will not be an outbreak of Omicron large enough to significantly reduce the use of petroleum products there, notes for his part Mike Muller, head of the Asia region at Vitol. Especially since the Chinese central bank seems to have decided to fight any slowdown in the domestic economy. For the first time since April 2020, the People’s Bank of China (PBC) lowered its medium-term credit facility rate to 2.85%. The BPC also reduced the interest rate on its seven-day reverse repurchase agreements from 2.20% to 2.10%. “The 10 basis point cut was larger than expected, suggesting authorities have become more concerned about the weak economy,” said Carlos Casanova, an economist at Union Bancaire Privée in Hong Kong.
Finally, the very tense geopolitical context in certain regions of the planet (with Ukraine in the lead) is also sustaining the bullish phase of crude oil.