Crude oil prices surged more than 60% this year with no end in sight amid global economic recovery from the coronavirus pandemic and a gradual increase of oil output from OPEC and its allies to offset 5.8 million bpd of production cuts last year.
The international benchmark Brent crude has risen 60% from $51.80 per barrel at the end of 2020 to more than $83 on October 6, 2021. Meanwhile, the West Texas Intermediate (WTI) gains 63% to trade around $79 per barrel.
The increase in crude oil prices raises concerns in consumers, especially vehicle owners, with a constant rise in fuel prices as some speculate that the price could go up as high as the 2011 level when the crude oil price rose to $125 a barrel.
To reach the 2011 level, oil prices must breach the $90 and $100 support level first, which is the highest that analysts are giving as of now.
Among global researchers, the Bank of America said that the oil price could reach $100 per barrel if the temperatures are colder than expected during the winter which could support demand for more energy consumption. Meanwhile, Goldman Sachs upgraded its target from $80 to $90 a barrel on a faster than anticipated recovery in global demand.
Colder temperatures could be a factor that spikes the oil price this winter. Weather is hard to predict, especially in a long-term forecast given that summer just ended and autumn has just started. Nevertheless, meteorologists came to the same conclusion that the emergence of a La Nina could bring colder weather to the northern U.S., while if the polar vortex breaks the confines of the Arctic, parts of Asia, Europe and North America will be blasted with bursts of cold, which would continue to drive demand for heat.
In the meantime, OPEC+ has been going easy with the oil output despite the U.S. President Joe Biden’s pledge to boost output to tackle rising gas price as inflation could slow down the economic recovery. Still, the group continues to keep the pace in increasing output by 400,000 barrels per day (bpd) a month that should extend to at least April 2022. OPEC+ will meet again on November 4, 2021.
In addition, Eurasia Group expects Brent crude to trade at $75 per barrel through to the end of 2021 with the oil contract expected to fall to $67 next year.