InvestorQ : Why is the Crude Oil price rally still continuing and what is your outlook for crude oil prices?
swati Bakhda made post

Why is the Crude Oil price rally still continuing and what is your outlook for crude oil prices?

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Sam Eswaran answered.
2 months ago
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Crude oil prices climbed further on Friday scaling gains of more than 3% for the week. The story remains the same. There are signs of robust demand and tighter supplies. Meanwhile, the spike in the price of coal is also leading to a shift towards oil and gas use. Brent crude touched the highest level since October 2018 at $84.85/bbl and it is getting close to the big peak of 2014, which is yet to be scaled in the last seven years of oil market trading.

The WTI based US crude is not too far behind. It scaled $82.05/bbl with the discount to Brent Crude having narrowed substantially in the last few days. Already, the OECD stockpiles are at the lowest levels since 2015 and that is also chasing oil prices higher. Increasingly, diesel is powering factories compared to expensive coal. In fact, the IEA projects that the energy crunch will boost the demand for oil by nearly 500,000 bpd of oil.

Till the time the OPEC gets its supply act together, the gap of 700,000 bpd is likely to stay. In fact, some of the oil analyst are preparing themselves for a massive bull rally in oil. Some are even calling it a multi-year structural rally in oil. US crude inventories rose by 6.2 million barrels in the week but experts opine that in the midst of such a huge gap between demand and supply, these cues from US oil inventories would hardly make any dent on oil prices.
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