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Oil prices back on the Up

21 March 2022
Jack Baker

Hope for a solution between Russia and Ukraine cut back the soaring energy futures, but the spot price of crude oil today has climbed 3.17 per cent, extending gains a third straight session to over US$108 per barrel.

The International Energy Agency said crude is tracking for a 700,000/Bbl a day supply deficit constrained by Western sanctions against Russia, potentially drying up output from the world’s largest geographical nation by 3 million barrels a day.

Analysts have stated conservative estimates sees oil around US$120/BBl for the foreseeable future.

French hedge fund manager Pierre Andurand said he’d anticipated oil reaching US$150/Bbl before the Russian invasion.

“I think close to US$200/Bbl, so much higher than today, I feel like there’s no demand destruction at US$110/Bbl, and we will have to go significantly higher before demand can go down by enough,” he said.

Brookside Energy managing director David Prentice said the conflict spotlighted the already critical supply-demand imbalance.

Russia is the second-largest exporter of oil globally, and even the threat of disruptions reverberates around the globe.

He noted that OPEC and the US have limited ability to increase supply with low inventories, placing upward pressure on the oil price.

“Longer-term governments and citizens are likely to emphasise energy security. This shift in sentiment will underpin demand and put a floor under prices and hopefully encourage a new wave of exploration and investment in the development of oil reserves.”

According to investment advisor Nick Dominijanni of RBC Dominion Securities, there are some short-term profits in commodities and precious metals with the S&P 500 usually falling around six per cent following militia military conflicts after The Second World War.

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