Oil rose on Friday, exceeding the high set earlier this week and reaching a new peak of 13 months.
West Texas Intermediate crude hit $ 59.74 a barrel on Friday, its highest level since January 2020, a promising sign as the industry struggles with depressed demand during the coronavirus pandemic.
However, after a 23% hike so far this year, a leading energy expert warns that the commodity may have moved ahead.
“My personal opinion … is that the price is very sparkling and does not guarantee a WTI price in excess of $ 58,” Regina Mayor, KPMG’s global and North American energy chief, told CNBC’s “Trading Nation” on Thursday.
The mayor is seeing positive signs that market conditions support prices higher than last year’s low levels. Lower demand and fears of prolonged blockages had in April 2020 turned a negative crude oil futures contract for the first time in history.
“Supply is decreasing. … We are all surprised at how quickly it takes to reduce these stocks and bring us closer to the 5-year moving average,” said Mayor of what is driving oil prices. “They were [also] seeing an improvement in real-life demand from China and India, although I warn that China’s number is a pandemic comparator for January 2020 compared to January 2021, and there are expectations that demand will increase with vaccinations and more people moving. “
These factors support West Texas Intermiate’s oil trade at a low of $ 50, instead of close to $ 60, said the mayor. She noted that any price above $ 30 for WTI is profitable for producers.
US stocks fell to their lowest level in 11 months last week. Meanwhile, OPEC limited its supply in February and Saudi Arabia will reduce its production by 1 million barrels per day in the coming months.
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