Crude oil broke through $100/barrel after 8 years, why did it climb? Will it continue to rise?

　　China News Service, February 18 (Reporter Zhang Xu) As the situation in Russia and Ukraine has become increasingly tense, the price of oil, known as "black gold", has been rising.

　　According to data from Platts, the spot price of North Sea Brent crude oil in the UK market reached US$100.8 per barrel on the 16th, the first time since 2014 that it exceeded 100; the price of Brent crude oil futures also exceeded US$96 per barrel.

Will crude oil continue to rise?

WTI crude oil futures prices have continued to rise for a year.

The data comes from Yingwei Finance.

Tight supply and demand boosted spot crude oil to "

　　Why are crude oil prices so strong?

Many people attribute the soaring oil prices to the conflict between Russia and Ukraine, but industry insiders believe that in the final analysis, it is still a problem of imbalance between supply and demand.

　　According to Han Zhengji, a crude oil analyst at Jinlianchuang, on the supply side, the OPEC (OPEC) report shows that due to the difficulty of some oil-producing countries to increase production, OPEC's production recovery rate is lower than the planned target, and the oil production of seven member countries has declined. .

　　The increase in demand also boosted crude oil futures prices all the way up.

　　Longzhong Information analyst Li Yan told Zhongxin Finance, "For more than a year, Brent crude oil futures have broken through multiple integer points all the way. It broke through $50 on December 10, 2020; it broke through $60 on February 8, 2021. ; breakthrough $70 on June 1; $80 on October 4; $90 on January 28, 2022. This provides a price basis for spot crude oil to break $100.”

　　Previously, crude oil futures broke through the $50 mark because of the progress in vaccine research and development in Europe and the United States, and the frequent release of positive news, which brought support to the market.

The breakthrough of the $80 mark is due to the gradual easing of the epidemic data, coupled with the relaxation of control in many overseas countries, so that the demand for crude oil has not been greatly hindered.

　　Li Yan said: "The demand outlook continues to be optimistic, and the supply has not increased significantly, which is an important reason for the rise in crude oil prices."

　　The IEA (International Energy Agency) expects oil demand in 2022 to exceed pre-pandemic levels, averaging 100.58 million barrels per day.

At the beginning of the year, JPMorgan also predicted that oil prices would rise to $125 a barrel in 2022 and $150 a barrel in 2023.

Geopolitical influence cannot be ignored

　　In addition to tight supply and demand, geopolitics and commodity prices are generally rising, and they are also important drivers of crude oil prices.

　　Li Yan said that Iran is an important oil-producing country, and the United States recently stated that negotiations with Iran have entered the final stage.

Once the two sides reach an agreement, the supply of crude oil in the market will increase, which is a negative impact on prices.

　　Lin Boqiang, dean of the China Energy Policy Research Institute at Xiamen University, pointed out that in terms of geopolitics, the recent tense relations between Russia and Ukraine, and Ukraine is an important energy channel in Europe, the market is worried about supply being blocked.

If the conflict between the two sides eases, the pressure on oil prices will be reduced.

　　He also said that the general rise in commodities is also a factor affecting the rise in oil prices.

At present, coal, copper, aluminum, etc., among the bulk commodities, have a strong rise, which has also driven the price of crude oil to rise.

A gas station in Haidian District, Beijing.

Photo by China News Service reporter Zhang Xu

Will crude oil continue to rise?

　　It is worth noting that after breaking through 100 on the 16th, international oil prices closed down on February 17.

　　The New York Mercantile Exchange WTI March crude oil spot contract closed down $1.90 to $91.76/barrel, or 2.03%; the ICE Brent April crude oil spot contract closed down $1.84 to $92.97/barrel , down 1.94%.

　　What's next for oil prices?

Most analysts believe that short-term Iran and Ukraine are the two key factors.

　　"If the conflict between Ukraine and Russia does not deteriorate further, then oil prices may remain stable or slightly decline," said Lin Boqiang.

　　Jinlianchuang crude oil analyst Xi Jiarui believes that the resumption of Iranian crude oil output will play a positive role in increasing crude oil supply; further easing of relations between Russia and Ukraine will also help the market to squeeze out bubbles; in addition, most central banks in Europe and the United States have indicated that they will accelerate the implementation of currency contraction. Tighter policies will also help curb the rise in oil prices.

　　Xi Jiarui said: "On the whole, the driving force for further rise in oil prices has begun to retreat, and crude oil is expected to fall below $90 per barrel." (End)