International oil prices climbed above their highs earlier in the week on the 12th, hitting a 13-month high.
West Texas Intermediate (WTI) Crude Oil prices reached 59.74 per barrel, the highest level since January 2020, an optimistic sign as the energy industry is facing low demand during the new coronavirus pandemic.
But after rising 23% so far this year, a senior energy expert warned that oil prices may have gone too far.
Regina Mayor, head of global and U.S. energy at KPMG, said, “My personal view is that oil prices are a bit bubbly and WTI is afraid it will be too busy to stand at $58 for too long.”
However, he saw a positive reaction, showing that market conditions are keeping oil prices above last year’s lows. Falling demand and fears of a prolonged stagnation have sent a crude oil futures contract in April 2020 to its first-ever negative value.
Majors noted, “Supply is falling. What’s surprising is how long it’s going to take to get these energy stocks back close to the 5-year average.”
He spoke of what is driving oil prices higher noting, “China and India have seen a marked improvement in actual demand, but it is important to note that the China numbers are using January 2020 compared to January 2021 during the Epidemic and then the market expects to push up demand as vaccinations increase and people start going outside.”
Majors said these factors support WTI trading in the low $50s, rather than closer to $60. She noted that any price above $30 for WTI would be profitable for oil producers.
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