The price of oil surged on 28 September to hit a three year high of more than $80 per barrel, and Goldman has forecast that prices will climb even higher over the following months. Brent Crude hit its highest price since October 2018, trading at $80.69 on the day, with other crude oil prices following suit.
Reasons For Hike In Oil Prices
Oil prices have been rising steadily throughout 2021, and the energy crisis currently impacting Europe has had a major impact on demand, with higher natural gas prices making oil a far more attractive solution for power generation.
The easing of COVID-19 regulations is another major reason for the increased demand for oil, as countries around the world start to increase production levels.
Hurricane season in the US wiped out production at plants across the Gulf of Mexico, leading to increased US demand for oil.
Forecasts for a colder than normal winter season and increased demand for oil right across the travel sector have led analysts Goldman Sachs to revise their forecasts for oil prices upwards to around $90 per barrel over the cold-weather season.
India is the biggest importer of crude oil and has increased orders to a three-month high due to predictions of higher demand, while Vitol, the world’s leading independent oil trader, has predicted demand will increase by 500,000 barrels daily over the winter period of 2021.
What It Means For Traders
The coming months are not looking rosy for car drivers due to the increased oil prices.
Petrol and diesel are already standing at record high prices and it seems the only way forward will be to hike prices further.
Crude oil is used to produce both petrol and diesel, and current prices stand at highs of £1.35 per litre for petrol and £1.36 for diesel.
The RAC fuel spokesman, Simon Williams, commented that things were looking “pretty bleak” for UK drivers, adding, “We might yet see higher forecourt prices in the coming days, irrespective of the current supply problems.”
Investors looking for good short term buys could be well advised to consider crude oil or some of the major petrol and diesel producers.