Listen to this Article Now
July 9th 2021
By: Norvisi Mawunyegah
Oil prices rose to a near three-year high above $75 a barrel on Thursday, ahead of a decision by key producers on output policy for the second half of 2021.The price of August West Texas Intermediate crude inched up 2.4 percent, or $1.76, to $75.23 a barrel, its highest level since October 2018. Brent crude, the international benchmark, rose 2%, or $1.49, to $76.10 per barrel in September.
After starting 2021 at roughly $48.5 per barrel, the WTI has increased more than 50% this year. Demand has risen as people return to the roads following the economic recovery, and prices have been sustained by a resurgence in goods traffic and air travel. Gas prices are rising as a result of the post-pandemic driving frenzy, and $75 crude oil prices could mean much higher prices at the pump. According to AAA, the current average price of unleaded gasoline is $3.123 per gallon, up from $2.179 per gallon a year ago. The advance occurred ahead of a meeting between OPEC and non-OPEC partners, known as OPEC+, who have expressed optimism about improved market conditions and the prognosis for fuel demand growth following this year’s strong rise in oil prices.
According to “Worldwide Exchange,” Jeff Currie, global head of commodities research at Goldman Sachs, the predicted OPEC output increase of 500,000 barrels per day may not be enough to keep prices low. “During the month of June, we estimate that the market was in a 2.3 million barrel per day deficit… The bottom line, demand is surging as we head into the summer travel season, and that is against a nearly inelastic supply curve,” Currie said. WTI futures fell into negative territory for the first time in history just over a year ago as the coronavirus pandemic spread, shutting down economies throughout the world. Oil might rise to $100 per barrel, according to Bank of America, due to rising demand.