Oil exceeded $86 in trading last week
Market analysts’ expectations indicate that a barrel will reach $90
The gas crisis in Europe caused an increase in oil prices
Crude oil prices have climbed since the end of last week at the top of 7 years, in conjunction with changes in the global energy market, linked to the scarcity of gas and the recovery of major economies from the economic consequences of the Corona pandemic.
In morning trading on Wednesday, the price of Brent crude futures contract for December delivery reached $84.6, near a 7-year high.
While the price of US West Texas Intermediate crude for delivery next December reached 82.58 dollars a barrel.
Since the beginning of this year, the price of Brent barrel has risen 61 percent, up from about $52.5, offset by a 66.4 percent rise for US crude.
Brent oil prices recorded $15 a barrel in April 2020, while US crude contracts amounted to minus $40, coinciding with the collapse in demand for traditional energy sources, as a result of the outbreak of the Corona pandemic.
** Reasons for height
The increase in natural and liquefied gas prices by 600 percent during this October on an annual basis in European countries, restored the momentum to oil and its derivatives, which replaced gas in generating electric power for factories and homes of the old continent.
Despite the decline in gas prices in Europe to $ 980 per thousand cubic meters during early trading yesterday, Tuesday, a decrease of 10 percent compared to the opening of Monday’s trading session, and by 50 percent from the highest price recorded this month of 1960 dollars, but prices are still high by more than 300 percent.
Oil and its derivatives are still an acceptable alternative to European countries that have been unable to provide their needs for gas, while factories have closed due to the high costs of energy production, and others have gone bankrupt, according to a report by “Euro News”, this month.
Also, the acceleration of vaccination campaigns against Corona around the world led to the recovery of the global economy, albeit in a different way, and the return of factories to their normal production capacity, in front of the high global demand for consumption.
And factories’ demand for natural gas for power generation rose, in front of the stability in supplies, which resulted in a shock in the rise in demand, which prompted countries such as Europe to withdraw from stocks, as they fell to their lowest levels in a decade.
The “OPEC +” alliance had a major role in the rise in demand for crude, especially since the third quarter of 2021, with its adherence to slowly easing production cut restrictions by 400,000 barrels per day each month.
Currently, the total oil production cut by the coalition is 4.6 million barrels per day, and it aims to reach a reduction of zero barrels by September 2022.
Contributing to the improvement in oil prices, European accusations against Russia of suspending the increase in natural gas supplies to the continent, as one of the pressure tools led by Moscow to operate the Nord Stream 2 gas pipeline, which is facing an American rejection.
However, crude oil prices are beginning to face the dilemma of inflation, as it may slow the rise in the price of a barrel towards $90, amid expectations of a decline in demand from factories.
Consumer prices in the United States are at 5.4 percent, the highest level since the global financial crisis, while inflation rates in the European Union and the eurozone are 3.4 percent, their highest level in 8 years.
The United States says that the current global inflation will be temporary, with prices returning to stability by the first half of 2022.
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