Oil prices briefly went above US$50 per barrel for the first time in weeks Wednesday, after the International Energy Agency (IEA) and the Organization of Petroleum Exporting Countries (OPEC) both predicted higher demand and a softening of the supply glut that has kept prices down for the last three years.
“Oil demand for 2017 will expand by the most in two years, the Paris-based IEA said on Wednesday,” Bloomberg reports. “That followed OPEC’s increase of its estimate for how much crude buyers will seek from the cartel next year, driven by rising consumption in Europe and China.”
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Oil prices haven’t pushed above $50 since July 31, the news agency notes, after oil-producing nations failed to reach an agreement to reduce the supply surplus. At the time, Goldman Sachs predicted prices could fall below $40 per barrel without “shock and awe” from OPEC.
This week, benchmark West Texas Intermediate crude oil hit a high price of $50.50 for October delivery, before falling back to $49.89. But to sustain a price above $50, commodity traders will need to see “increasing clarity on OPEC’s strategy on eventually bringing back barrels onto the market and the possibility of an extension [of the cartel’s supply cuts] beyond March,” Senior Portfolio Manager Eric Nuttall at Toronto-based SPR & Co. told Bloomberg.
In addition to the IEA and OPEC reports, the U.S. Energy Information Administration predicted that global oil demand will rise from 95 to 104 million barrels per day between 2015 and 2030—although other analysts would beg to differ, and Canada’s fossil industry is beginning to take those other voices more seriously.