Three-year high oil price means further pressure on household bills

Oil prices rose for a fifth day in a row, with Brent crude oil prices at their highest level since October 2018 and heading towards $ 80 a barrel due to supply issues as demand picks up in parts of the world with the relaxation of pandemic restrictions.

Brent crude rose $ 1.43 or 1.8% to $ 79.52 a barrel, after posting three straight weeks of gains. The equivalent U.S. crude oil contract added $ 1.44, or 2%, to $ 75.42, near its highest since July, after rising for a fifth straight week last week.

Goldman Sachs raised its forecast for Brent crude by $ 10 at the end of this year to $ 90 a barrel, as the faster recovery in fuel demand after the Delta variant of the coronavirus outbreak and the blow of the Hurricane Ida on US production led to tight global supplies.

While we have long had a bullish outlook on oil, the current global supply and demand deficit is larger than expected, with the recovery in global demand due to the Delta impacting even faster than our above forecast. consensus and global supply remaining below our lower level. -consensus forecasts, ”Goldman said.

Forecasts of rising oil costs will be closely watched around the world as central banks monitor inflation after the pandemic.

Consumer prices in Ireland have risen in recent months to an annual rate of 2.8% in August as energy costs push up household costs.

Taken aback by the rebound in demand, members of the Organization of the Petroleum Exporting Countries and their allies, known as Opec +, struggled to increase production because of underinvestment or delays in production. maintenance persist due to the pandemic.

“Price support came from tight supply in the United States, with disruptions in the Gulf of Mexico spurring lower inventories,” said Stephen Brennock of oil broker PVM.

The European crude benchmark was also supported by gains across the energy complex, he added.

Soaring natural gas prices have fueled rumors that it could stimulate demand for alternative fuels, including petroleum, ”Brennock said.

Goldman Sachs analysts, including Damien Courvalin, wrote in a note to clients: “The observable inventory drawdowns are the largest on record.

“This deficit will not be reversed in the months to come, in our opinion, because its magnitude will exceed both the will and the capacity of Opec + to ramp up.”

Reuters, Irish Examiner, Bloomberg

About Leni Loberns

Check Also

Joe Biden’s green agenda hits Americans with an oil shock

When his green credentials were challenged by a young campaigner, Joe Biden had a simple …