Tailwinds building behind oil prices
Oil prices are expected to trend higher over the next few months
By Rob Roach, ATB Economics 28 September 2021 1 min read
Damage caused by Hurricane Ida has helped the West Texas Intermediate crude oil price benchmark close above $US70 since September 13. The Western Canadian Select benchmark has also been doing well, closing near or above $US60 over the same period.
And while anything can happen when it comes to oil prices, they are expected to trend higher over the next few months as tight supply and rising demand—despite the ongoing pandemic—form strong tailwinds.
An increase in supply on the part of the OPEC+ cartel is likely, but it will take time for output to increase due to delayed maintenance and reduced investment in new supply due to the pandemic and last year’s price war between Saudi Arabia and Russia.
Meanwhile here in Alberta, oil production over the first seven months of the year was 7.4% higher than in 2020 and the value (in Canadian dollars) of crude oil exports was 42.8% higher.
As consumers, we will feel the strong prices at the pumps, but our oil patch and the jobs, spending, returns and royalties it generates will benefit and help the provincial economy return to its pre-pandemic level sooner than expected.
Answer to the previous trivia question: There are approximately one hundred billion neurons in the human brain.
Today’s trivia question: Hurricane Ida made landfall near Port Fourchon, Louisiana on August 29, 2021. This was the anniversary of what event?