Oil: Sentiment And Speculation Drive Recent Price Hike
Ellen Wald | Oct 14, 2021 05:52
Why is WTI and American crude oil suddenly priced so high? Prices were below $63 less than two months ago and this week WTI surpassed $80 per barrel, reaching its highest level since 2014 when the last major price adjustment was in progress.
Let's focus on that quandary and take a closer look at what's really affecting prices. And as we will see, the rise in price is more an issue of sentiment and speculation, than a reflection of supply-demand fundamentals.
It is true that demand did increase GasBuddy data, gasoline demand in September fell 3.35%. The economy is still impacted by the COVID virus, and there are strong forecasts indicating economic hubs in the northern U.S. will face another wave this winter.
Moreover, refinery utilization last week was 89.6%, according to the EIA. The EIA showed a gasoline build too. These data do not indicate a supply shortage currently nor in the near future.
Also, production from the Gulf of Mexico—which had been increase production even at much higher prices.
Pre-COVID, U.S. oil production U.S. electricity generation .
h2 Speculation/h2Speculation is always a driving force in commodities markets. Institutions and people invest to see monetary returns, and right now the U.S. equities market is not doing well. Investing in the oil market has been much more lucrative over the last two months.
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