Driven by a combination of production constraints and recovering demand, international oil prices have continued to rally in recent days and have now risen to levels seen before the start of the new crown Epidemic last year.
Among them, Brent Crude Oil futures prices have risen more than 50% since the end of October last year, with prices approaching $60 per barrel, the first Time since the beginning of 2020 that they have approached this price level; WTI crude oil futures prices have exceeded $55 per barrel for the first time in a year.
In contrast, the global economic recovery still has a long way to go. The latest unemployment situation in the U.S. released on Friday showed that the number of first-time claims for unemployment benefits in the U.S. was 779,000, less than market expectations and the previous value. Market analysis suggests that this indicates that the U.S. economy continues to recover slowly from the new crown epidemic.
The rapid recovery in crude oil prices surprised many investors and analysts, considering the still-severe global epidemic.
The Wall Street Journal analysis suggests that the rise in oil prices is actually related to the rapid depletion of inventories, and that the rate of depletion exceeds many expectations. If demand continues to pick up, it could pave the way for further increases in oil prices.
The depletion of oil inventories, on the other hand, is related to the production cut efforts of OPEC+. The OPEC+ Joint Ministerial Production Cut Monitoring Committee (JMMC) held an online meeting last week and released a statement after the meeting saying that it is optimistic that 2021 will be a year of recovery and will keep pushing to quickly digest the oversupply caused by the slump in demand due to the epidemic.
In addition, U.S. EIA data also shows that U.S. producers are producing 17% less crude oil than they did before the outbreak.
What does the future hold?
On Friday, the price of the WTI crude oil futures contract, due for delivery next month, was $5.16 higher than the March 2022 contract, the largest premium for near-month crude oil futures since the outbreak. According to JPMorgan analyst Ruhani Aggarwal, the opportunity to capture this extra return has attracted investor money into the commodities market in recent months, fuelling the bullishness on the crude oil market.
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