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Oil prices rose about 30% in the first quarter of this year, with WTI and Brent posting their best quarterly performance in a decade – since the second quarter of 2009.
At the beginning of the second quarter of 2019, WTI crude oil had already exceeded $ 60 last week and it was trading above that level the first week of April, while Brent Crude flirting with the $ 70 mark for days.
At the end of last year, analysts predicting such a rapid rise in oil prices in 2019 were in the minority, after market players panicked in the face of bleak forecasts of slowing growth in oil demand that would have dropping oil by nearly 40% in the fourth quarter of 2018.
A quarter of this year, signs began to appear, indicating that concerns about slowing growth in demand may have been exaggerated.
Demand has been resilient – in fact, it has held up better than many experts expected late last year. Combined with the tightening of the market due to cuts by OPEC and its allies and US sanctions that paralyzed Venezuelan and Iranian oil sales, oil prices may have surprised many forecasters.
Rising oil prices have naturally led to higher gas prices, and forecasts suggest that US drivers should expect further increases in gas prices in the spring and that motorists drive more. The refinery maintenance season in the United States is also weighing on inventories and gas prices, AAA said in an update on April 4.
"Until refineries resume their normal operations, which will take a few weeks, US motorists should expect pump prices to increase as demand for gasoline increases." , "said AAA. Related: The cheapest natural gas in the world
Patrick DeHaan, Petroleum Analysis Manager for GasBuddy, said on April 1:
"Motorists are not fooled, gas prices have continued to rise. For the seventh consecutive week, the national average continued to increase, without slowing down, due to seasonal impacts. The rise of this spring has been worse than before and so far, the national average has increased by almost 50 cents per gallon compared to our lowest level of 2019. "
"Unfortunately, it's a rut in which we'll be stuck for at least a few more weeks," DeHaan said.
One of the factors driving up oil prices so far this year has been "a very resilient demand," CNBC's Michele Della Vigna, head of natural resources research at Goldman at CNBC, told CNBC. Goldman Sachs.
"Everyone started the year with a very negative vision and the demand has held up well," said della Vigna.
"Demand remains strong, especially in emerging markets, which continue to buy a lot of crude," noted Goldman's expert.
The current price level is suitable for all producers – it helps to sustainably manage the deficits of some OPEC members, it is actually very profitable for the sector and it is sufficient for the American shale to continue growing, declared della Vigna to CNBC.
Goldman Sachs does not see Brent crude prices well over $ 70 or less than $ 60 a barrel in the coming weeks.
However, certain events expected in the coming weeks and months could affect the global oil supply and determine the trend of oil prices (and gasoline) until the summer.
Assuming that demand growth is maintained, as Goldman has said so far this year, the supply is expected to tighten further as US sanctions against Venezuela and the upcoming review of US waivers for customers Iranian tankers. The Trump administration is not expected to cut all Iranian buyers in early May, given President Trump's aversion to high gasoline prices and the current price of Brent at $ 70 a barrel. . Related: Russia in search of a new oil border in the Arctic
OPEC and its non-OPEC allies led by Russia will re-examine their production reduction pact at the end of June, but at this meeting they will have a clearer idea of where they will be going. offer, because the United States will have already decided whether it should be extended and to whom. extend exemptions for Iranian oil purchases.
Saudi Arabia, leader of OPEC, has clearly announced that it will do everything in its power to rebalance the market, with cuts likely to last until the end of 2019, while Russia, which is not an OPEC leader, manifests, as usual, its reluctance to further cuts.
On the demand side, global economic growth is still weakening and the trade war between the United States and China is hiding in the shadows to flee the oil market again.
The first quarter of this year was marked by resilient demand and tightening of supply, driving up oil prices. The US sanctions policy vis-à-vis Iran and Venezuela, the state of the global economy, emerging market growth, trade disputes, the budgetary needs of members of the OPEC or a sudden break in supply, Libya for example, will all determine – to varying degrees – oil prices will be in the coming quarters.
By Tsvetana Paraskova for Oilprice.com
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