What is increasingly a burden for motorists at the gas pump is triggering joy among investors – provided you have invested in energy stocks. Because this week, the price of oil has already briefly jumped to $94. Now it is allowing itself a long-overdue breather.
U.S. Reports Decline in Crude Oil Inventories
A correction or even a somewhat stronger consolidation is long overdue after seven weeks of uninterrupted price increases. There are currently enough short-term price of oil drivers. Last week, for example, there was a severe cold snap in Texas, fueling concerns about production losses.
A year ago, oil production in Texas was massively affected by a cold snap. The U.S. already has a surprisingly significant drop in crude oil inventories.
OPEC Reaches Agreement in Record Time
And so it comes as little surprise that the price of oil has risen to its highest level since 2014. The price continues to hold above $90 – even though OPEC agreed in record time to increase production by 400,000 barrels a day.
The meeting lasted only 16 minutes, and then there was already agreement. OEPC is also aware that the oil market will tend to be oversupplied this year. So OPEC, and Saudi Arabia in particular, could increase production significantly more.
Risk Premium Due to the Ukraine Conflict
Although OPEC’s higher production capacity can absorb short-term supply shortfalls, this does not currently change the risk assessment. This is because tensions between Ukraine and Russia are increasing.
The majority of oil traders are currently calculating a risk premium in the event of an escalation. Numerous bank analysts have already reacted and raised their forecasts – in some cases to over $100 in the course of the year.