Rising is far from over? Royal Bank of Canada suggests that returning oil prices back to $100 is not a dream

Time:2018-07-02

  According to Croft, chief strategist at the Royal Bank of Canada Capital Markets Commodities, WTI was seen at $77/barrel. If the WTI rises above 77 U.S. dollars per barrel, there will be considerable upside.

  In other words, Croft believes that oil prices need to rise by more than 3%, but if this level is reached, oil prices may still hit new highs for many years. Earlier, Croft said at the end of May that oil prices may return to $100/barrel in the future.

  The current geopolitical tensions may provide a starting point for this rebound. Earlier last week, US President Trump urged his allies to stop importing Iranian crude oil. Croft said the move was an attempt by the United States to "reduce Iranian exports to zero."

  The oil price was the highest since November 2014. By the end of June, oil prices have risen for the first time in four consecutive quarters since 2010. In the second quarter of this year alone, the price of oil rose by 14%.

  Croft believes that tensions in the Middle East will also worsen the supply of the oil market, pushing up demand and pushing up oil prices. She added that the oil market will tighten in the second half of this year and she thinks this is inevitable.

  Croft also stressed that the world is paying attention to how much Saudi Arabia will increase production. During the OPEC meeting in June, OPEC member states announced that they would increase production, but did not give specific figures for increasing production.

  Last Tuesday, it was reported that Saudi Arabia plans to raise its crude oil production to a record high of 11 million barrels per day, and the oil price once fell.

  WTI crude oil closed above $74/barrel last Friday (June 29), the highest level since November 2014.

  Trump pushes pressure on Saudi Arabia to increase production on weekends, and oil prices drastically jumped on Monday.

  On Monday (July 2nd), international oil prices fell sharply after the opening bell. WTI crude oil hit a low of $72.62/barrel, and Brent crude oil hit a low of $78.39/barrel.

  The main driver behind the jump in oil prices is US President Trump. On June 30, Trump said on Twitter that he had just telephoned Saudi Arabian King Salman Bin Abdul-Aziz and demanded that Saudi Arabia increase oil production due to the turmoil in Iran and Venezuela. 2 million barrels per day. The Saudi King agreed.

  The White House later issued a statement saying that in response to the president’s assessment of the oil market deficit, King Salaman stated that Saudi Arabia will maintain idle production capacity of 2 million barrels per day. If necessary, Saudi Arabia will “careful use” to ensure market equilibrium. .

  Iran warns: This is the U.S. request Saudi Arabia to withdraw from OPEC

  Iranian ambassador to OPEC Ardhibli said on June 30 that US President Trump demanded that Saudi Arabia increase its crude oil production by 2 million barrels per day. This move can be regarded as the United States demanding that Saudi Arabia withdraw from OPEC and its agreement.

  The Russian Satellite Agency quoted Shana, the official website of the Iranian Ministry of Oil, as saying that "Apart from Saudi Arabia's lack of such capacity to complete the increase in crude oil production, this requirement can itself be regarded as an order to require Saudi Arabia to withdraw from OPEC. ”

  On June 23, OPEC member states and other major oil-producing countries that participated in the 2016 production cut-off agreement in Vienna reached an agreement and decided to increase crude oil production appropriately from July. Previously, on November 30, 2016, 11 major oil-producing countries such as OPEC member states and Russia reached an agreement to reduce production of crude oil in Vienna, reducing daily production of crude oil by approximately 1.8 million barrels per day from the level of October 2016. The agreement has been extended twice. The latest one was extended until the end of 2018.

  According to the OPEC agreement, any member country’s crude oil production cannot exceed its quota. Trump now demands that only the Saudi family increase production by 2 million barrels per day, which is expected to add further waves to the crude oil market.

  In June, U.S. media reported that the U.S. government hopes that all countries, including its allies, will stop importing oil from Iran before November 4. Otherwise, it will face U.S. sanctions. This time, the U.S. will not grant immunity to any country.