Crude Oil Price Piercing the Sky: Where Will We See the Black Gold by Xmas? / Commodities / Crude Oil
Knock, knock? Is it already the sky,or just a ceiling? Either way, oil has risen substantially — how high can itgo?
FundamentalUpdates
The crude closed on highs on Thursdaythanks to optimism about demand as well as the remaining tight supply. In fact,this increase is driven by a general market sentiment that is relativelyfavorable to the macroeconomic situation and the conviction that supply shouldremain tight until the end of 2021.
The WTI crude oil futures rose 1.5% -more than $1 compared to Wednesday's close. Like Wall Street, the oil markethas also been sensitive to more and more reassuring tone of messages from Chinaabout the situation of real estate developer Evergrande, which is on the vergeof default. In addition, the acceleration of air travel caused by Washingtonlifting restrictions on entry into the United States could also boost demandfor kerosene. And finally, while natural gas prices are hanging from theceiling, we could see a shift in demand from gas to oil happening, which wouldobviously boost the barrel rally in Q4!
GeopoliticalScene
Thursday evening, Lebanese Hezbollahannounced the arrival of a new shipment of oil from Iran to the Syrian port ofBanians — the party’s television channel Al Mana reported on its Telegramaccount this morning. Hezbollah argues that the shipments are intended to helpthe Lebanese people, who are suffering severe fuel shortages due to thefinancial crisis the country has been experiencing for the last couple ofyears.
On the other hand, Lebanese PrimeMinister Najib Mimait, expected at the Elysée Palace (Paris) on Friday, saidthat the shipments from Iran violated Lebanon's sovereignty, as both Syria andIran are subject to US sanctions.
Figure 1 – WTI Crude Oil (CLX21) Futures(November contract, daily chart)
Figure 2 – Henry Hub Natural Gas (NGV21)Futures (October contract, daily chart, logarithmic scale)
Withthe black gold now attempting to pierce through its all-time highs, it will beinteresting to see how oil demand will progress at those levels, as well aswhether OPEC+ will face some new pressures to intervene on the supply side inthe forthcoming weeks.
And…what do you think? We would like to hear from you! What’s your opinion on howhigh the WTI Crude could go before the end of the year? Do not hesitate to letus know!
Havea nice weekend!
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Thank you.
Sebastien Bischeri
Oil & Gas Trading Strategist
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