Oil prices jumped to a two-week high on Tuesday after the U.S. lifted travel restrictions. Other signs of a global post-pandemic recovery also helped to boost the demand outlook, while supply remained tight.
Oil prices rallied on Tuesday after the U.S. Energy Information Administration in its Short Term Energy Outlook (STEO) projected retail petrol prices would decline over the next couple of months. In its Short Term Energy Outlook, the energy projected average prices for retail regular-trade petrol would decline from $3.32 per gallon in November to $3.16 in December and $3.00 in the first quarter of 2022.
U.S. President Joe Biden’s administration made the decision to use STEO. The administration said it would use price forecasts in the STEO report to determine whether to release oil from the country’s Strategic Petroleum Reserve (SPR).
Global benchmark Brent crude futures gained $1.36 or 1.6%, to settle at $84.78 a barrel. U.S. West Texas Intermediate (WTI) crude jumped $2.22, or 2.7%, to settle at $84.15. Both of them reached their highest points since October 26.
In 2021, the price of Brent gained more than 60% and hit a three-year high of $86.70 on October 25. Strong demand, as well as the OPEC’s and its allies’ decision, helped to boost oil prices.
The Organization of Petroleum Exporting Countries (OPEC), as well as its allies, added 400,000 barrels per day (bpd). Last week, OPEC+ made the decision to stick to its existing pace of easing record output cuts. However, Biden wanted it to add more. Joe Biden’s administration may take measures as early as this week to address soaring gasoline prices.
Oil prices and important factors
Numerous factors have the potential to affect oil prices. Global oil spare production capacity could diminish in 2022, removing an important cushion that the market is currently enjoying, according to Saudi Aramco Chief Executive Amin Nasser.
Two days ago, travelers took off for the U.S. again. This and other factors helped paint a picture of a recovering global economy.
Global demand for oil in November almost recovered to pre-pandemic levels according to JPMorgan Chase.
In the world’s second-most populous country, fuel demand jumped in October to a seven-month peak.
In spite of a tight global market, analysts forecast U.S. crude inventories rose for a third week in a row, possibly helping to limit further gains in oil prices.
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