Why oil prices could climb to $100 a barrel in second half of 2022
Oil prices climbed on Tuesday to their highest level in seven years.
Brent North Sea peaked at $88.13 a barrel, while the US benchmark West Texas Intermediate (WTI) reached $85.74.
Analysts predict that oil prices could top $100 a barrel this year.
Driving the trend is investor concern about global political tensions involving major producers such as the United Arab Emirates and Russia that could exacerbate the already tight supply outlook, reports Reuters.
Bruce Whitfield interviews Raymond Phillips, Commodities Trader at Rand Merchant Bank (RMB).
There's a healthy demand for oil at the moment and it does seem like the Omicron variant is moving further and further away into our rearview mirrors and, with that... comes more travel, more trade... and definitely an increase in airline traffic.Raymond Phillips, Commodities Trader - RMB
How I look at the Brent Crude oil price at the moment is, it's actually a perfect mixture of increased demand and supply concerns.Raymond Phillips, Commodities Trader - RMB
First and foremost in everyone's mind is the geopolitical situation and we have a few of them going on around the world... a drone attack in the Middle East... tensions on the Russian and Ukrainian border which could also be bad for the energy complex as a whole, not just the oil price...Raymond Phillips, Commodities Trader - RMB
With what could be described as a meteoric rise in oil prices over the past few months, market traders are responding.
Quite a few experts have upped their bullish forecast to where it's not a question of whether we're going to see $100 per barrel but when are we going to see it... Many say it's going to come in the second half of this year.Raymond Phillips, Commodities Trader - RMB
With that, you've had an uptick in option market activity... taking bets on core options around the $100 mark.Raymond Phillips, Commodities Trader - RMB
Phillips says there's a feeling that it's pretty futile to get more supply into the system at the moment.
Back in October/November there was a concerted effort from the US and a few of their allies to increase the supply into the market that included asking Opec to increase supply as well but also releasing reserves... The little effect it had was very temporary.Raymond Phillips, Commodities Trader - RMB
Listen to Phillips' analysis in the audio clip below:
This article first appeared on CapeTalk : Why oil prices could climb to $100 a barrel in second half of 2022
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