At the end of last week and the beginning of this one, the issue of Brent oil growing filled our heads to the brim. Prices are, indeed, growing, accompanied by loud forecasts. Let’s find out what’s the reason for what’s going on and what to expect from black gold prices in the nearest future.

$80 for Brent barrel: this hasn’t been seen in 3 year

On September 28th, in ICE, Brent barrel reached over $80 during the trading session, amounting to the high of $80.75. This was the high of that day. This is extremely important because such results haven’t been reached since October 2018.

However, trades closed no less proudly – at $79.09, i.e. with a minor 0.55% decline. Earlier, the price had been growing for five sessions in a row, September 21st through 27th. Total growth was 7.6%, from $73.92 to $79.53 per barrel.

Today, while I was preparing the article, the negative trend persisted, and the price reached $77.64. For your information, this is a decline by 1.83%.

What’s made oil grow?

Experts say that the first reason for Brent black oil to grow is problems with the supply of oil from the Gulf of Mexico. Hurricane Ida did much harm to oil production facilities, and the USA still cannot cope with it. According to Bloomberg, production volume in the USA has shrunk by over 30 million barrels, and only in 2022 they will be able to return to former production levels.

All this is happening alongside increased demand for oil. Some quarantine measures being abolished, the vaccination campaign going smoothly, investors shifting from “dirty” to “green” energy sources, and gas prices sky-rocketing make oil reserves drain quite fast, experts say. According to Bloomberg, oil reserves have dropped to the volumes of three years ago.

For those who have missed the gas news: on September 28th, the price of a 1,000 cubic meters of gas in the EU rose over $1,000 for the first time in history. Expecting a cold winter, European countries buy out not only gas but coal. As a result, a ton of coal costs $200, as in 2008. In Rotterdam, coal futures price grew by 16.96% over a trading session, i.e. by $29.25 per ton.

What are the perspectives?

The median forecast for the end of the year is $77 per barrel,, yet Goldman Sachs experts expect more prominent growth over the next couple of months – to $90. In the Bank of America, they say that in the next 6 month oil prices might even reach $100, if winter turns out to be especially cold.

As for the demand for black oil in the long run, check OPEC forecasts. In the Organization, they say that by 2026, daily demand will have grown by 13.8 million barrel, reaching 104.4 million barrel a day. As you know, in 2020 it amounted to 82.5 barrel a day. Starting 2035, the value will be decreasing and will have reached 99 million barrel a day by 2045.

Moreover, OPEC expects oil to remain a significant part of the global energy balance until 2046. In 2020, oil took up 30% of the global consumption of energy carriers. By 2025, it will have reached 31%, and by 2045 – 28%, experts say.

Summing up

At the beginning of the week, oil prices reached $80 per barrel for the first time since 2018. There were several reasons for such growth. On the verge of a cold winter, futures for other hydrocarbons – gas and coal – are also growing.

OPEC forecasts that the global demand for black oil will be gradually decreasing until 2045, yet the resource will preserve a significant part of the market of energy carriers.

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He is the guru of searching for and demonstrating hidden opportunities and insights of the market. He writes about everything that might be of interest to the investor: stocks, currencies, indices, and various business spheres. Has been “in” since 2019.