Citigroup Also Says "Will Exceed $100 in Short Term"
WTI Closes at $91.48 per Barrel, Brent Oil at $94.43
International oil prices continue to rise due to Saudi Arabia's production cuts, with forecasts pouring in that prices will surpass $100 per barrel.
Mike Wirth, CEO of Chevron, stated in an interview with Bloomberg TV on the 18th (local time) that oil prices are expected to reach $100 per barrel.
Amrita Sen, Chief Researcher at consulting firm Energy Aspects, also said, "This is a short-term situation," but added, "The current fundamentals are very strong. If you ask whether oil prices can rise to $100 for a while, the answer is definitely yes."
On the day, international oil prices closed at $91.48 per barrel for West Texas Intermediate (WTI) and $94.43 per barrel for Brent crude. Both are the highest since November last year. Brent crude, the international oil benchmark, has risen more than 30% since hitting its lowest point in March this year. Oil prices surged due to a shortage of supply caused by production cuts from Saudi Arabia and Russia. Earlier, Saudi Arabia extended its policy of cutting production by 1 million barrels per day, which began in July, for three more months until the end of December. Russia also decided to extend its policy of cutting production by 300,000 barrels per day until the end of the year.
With oil prices rising to the mid-$90s per barrel, surpassing $100 is becoming more visible. Azerbaijani crude oil has already been traded near $100 per barrel since the 15th, pushing up the upper range of oil price forecasts. Even Russian crude oil, which had been traded at discounted prices under the oil price cap in the market, is reportedly fetching prices higher than the Asian benchmark.
Citigroup, which had previously taken a bearish stance on oil prices, also predicted on the same day that oil prices would surpass $100 in the short term. Ed Morse, a Citigroup analyst, forecasted, "Geopolitical and technical trading factors could push oil prices above $100 for a short period."
However, he added a caveat that oil prices are expected to decline in the long term. He said, "We are seeing a gradual easing of oil prices," and predicted that supply would increase in regions outside the Organization of the Petroleum Exporting Countries Plus (OPEC+), such as the United States and Brazil.
Concerns have been raised that the recent easing of inflation could rebound due to the sharp rise in oil prices, while some suggest that if the oil price increase prolongs, it could actually limit demand.
Bjorn Sjoblad, Senior Commodity Analyst at Swedish bank SEB AB, said, "The likelihood of Brent crude expiring above $100 per barrel is very high," but he also analyzed, "However, if Brent crude prices rise to $110?120 per barrel, demand for petroleum products is likely to suffer a greater blow. Such price levels seem excessive."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
