The supply and demand issue, along with other events pushed oil prices close to a seven-year high
Oil markets have lost momentum in the last three weeks, hit by a stronger dollar and rumors that President Joe Biden’s administration is considering releasing oil from the country’s Strategic Petroleum Reserve to cool prices. According to the latest energy reports, oil and natural gas rigs increased for the third consecutive week, with crude oil prices close to a seven-year high.
The news comes after Russia’s Rosneft – the second-largest oil company by output – warned of a potential “super cycle” in global energy markets, raising the idea of even higher prices as demand overpowers supply.
At the same time, OPEC cut the Q4 global demand forecast by 330,000 BPD (barrels per day), as high energy prices hampered the post-coronavirus economic recovery.
Regardless of the COVID-19 pandemic and its effects on the global supply and demand dynamic, the COP26 Glasgow climate summit shed some light on the worldwide energy system. According to British Petroleum CEO Bernard Looney, hydrocarbons such as oil and gas will have an ongoing role in the energy mix for decades. He pointed out that International Energy Agency’s “Net Zero” report in May noted that in 2050 the global oil supply would still amount to roughly 20 million barrels per day. He also expressed concerns about supply, saying that prices will increase, impacting consumers if oil and gas supplies decrease.
Sources: investing.com, reuters.com