As winter approaches and OPEC and its partners await an earlier agreement on oil production, oil prices could “rise from the charts,” a strategist told CNBC.
OPEC + – The Organization of the Petroleum Exporting Countries (OPEC), along with its partners, including Russia – has seen 50% increase in commodity prices this year after higher oil prices rose.
However, the gas station agreed on Monday to comply with the current agreement to reduce further fuel calls for 400,000 barrels (BPD) in November.
John Driscol, chief strategist at JTN Energy Services, described OPEC’s decision as “a very sensible approach” until one considers the current power crisis and possible supply cuts.
“I think [is] ሁሉ What will happen in the winter? Will we miss another Arctic cold? Driscol told CNBC Squawk Box Asia on Tuesday.
He pointed to a shortage of fuel in the UK – waiting for long cars to buy gas, and a “punch battle”. In the UK, people are fed up with buying fuel, causing shortages, and straining oil supply chains.
BURY ST EDMUNDS, SUFFOLK, UNITED KINGDOM – 2021/09/25 – People fill their cars at BP gas stations during a fuel crisis in Bure St. Edmunds.
SOPA Images | LightRocket | Getty Images
“When you go into winter, you really have to worry about that,” says Driscol. Unnecessary demand refers to the necessary costs for daily goods and services.
Driscol is particularly concerned if there is a slim stock or “any supply chain failure”.
Supply chains have been damaged by the oil crisis in Britain, and Brexit and the UK’s new EU trade relationship have been hit by a shortage of major truck drivers. It led the United Kingdom to bring in troops to supply oil.
Regarding oil prices, he said, “You can see the increase outside the charts – that’s a situation here.” I have never really heard anyone talk about low winter promises. I think we are going into the jungle here with all the uncertainty about climate and climate change.
Oil prices have risen by three years since the OPEC + decision. Brent traded $ 82.47 per barrel and WTI $ 78.84 in Asian hours last Wednesday morning.
But energy prices are already rising this year, with more than 50% of the raw material, and inflationary pressures.
Oil for $ 100?
Oil prices could be as high as $ 100 per barrel, but they are not sustainable, Driscol said.
I see that as a low probability. That is, if everything goes wrong, if we have Arctic weather, if there are crashes, if there are crashes, if there are supply chains. That is a possibility, but I do not think it will be permanent. ”
Driscol also pointed to the power crisis in China, which has led to widespread disruptions when local authorities cut off power to many factories.
Demand for natural gas and coal has risen in Beijing as the country struggles to cope with power shortages, Reuters reported.
In Europe, the region is also struggling with severe gas congestion in its own energy crisis.
Analysts warn that the crisis over gas shortages is set to boost oil demand ahead of the cold winter.
– CNBC’s Sam Meredith and Chloe Taylor contributed to this report.