Oil company earnings underwhelm despite crude price flirting with US$85 a barrel
BNN Bloomberg
Oil prices rose this week as tightening supply conditions and ongoing tensions in the Middle East contributed to push prices higher.
West Texas Intermediate crude (WTI) is flirting with the US$85 a barrel level, having gained almost 3 per cent since last Friday. This surge comes amidst a backdrop of decreasing U.S. crude inventories and key time spreads in the market showing signs of tightening.
Escalating tensions between Israel and Iran and supply curbs enacted by OPEC+ are also supporting the upward momentum in oil prices. These tensions pushed WTI prices above $86 a barrel earlier in the month, with Israel now intensifying preparations for a possible comprehensive war with Hezbollah.
But according to Vikas Dwivedi, global energy strategist at Macquarie Group, that upward momentum could evaporate as the year progresses. “We think it will just start to go away," he said of the risk premium that war has priced in. "And then … actual supply-demand fundamentals will start to exert themselves via surpluses in a bearish manner."
