Even after touching $93 per barrel last week, oil prices have room to grow further in the coming months, with major investment banks’ $100 oil projection now in sight. According to Vitol Group, the World largest independent oil trader, robust oil demand and the headroom for money managers to expand their long positions in the crude complex, combined with shrinking global spare production capacity and “worrisome” inventory levels, could push oil prices even higher.
The Russia-Ukraine situation and a hard cold in Texas that affected some Permian oil output, together with demand recovery and the moderate impact of the Omicron version on consumption, drove WTI Crude to above $92 per barrel at the end of last week. Aside from geopolitical tensions, market fundamentals remain solid, and China might add to that strength if it acts to replenish some of its crude stockpiles, according to Mike Muller, Head of Vitol Asia, who spoke on Sunday on Gulf Intelligence’s daily energy markets video podcast.
Furthermore, according to Vitol’s management, China appears to be less vulnerable to high oil costs than South Asian countries. Apart from the possibility of Chinese restocking once the Chinese New Year festivities complete this week, Vitol and analysts believe there is still room for larger long positions in oil.