Oi price continue their slow march higher, trading Monday around $82 per barrel, the highest prices since April 2020. Patrick DeHaan with GasBuddy says oil production is lagging far behind demand.
“Certainly not helped by the energy crunch that’s happening overseas. China is running low on coal and a natural gas shortage in Europe, both boosting demand for oil, as oil can be used in many of those situations to provide heat and also for electrical production.”
DeHaan noted demand for oil internationally continues to pick up stream, which will continue to put pressure on oil prices. Many, including the Biden Administration, are calling on OPEC nations to increase oil output to help relief prices. But DeHaan said OPEC is not going to increase production anytime soon.
“Potentially the Administration’s hostile reaction to the oil sector could be hurting the efforts of the President to ask OPEC to increase production. And I think that is probably one of the factors of why OPEC has not raised production, is simple because the Administration has made it very well known that there will be a transition to EV’s in the future. And so, potentially OPEC could be thinking why would we do the Administration any favors when they are going to be transitioning away from our sources of GDP.”
DeHaan noted at this point, it looks like these higher fuel prices are here to stay for for the foreseeable future.