The price of crude oil hit $80 a barrel on Tuesday – the highest in three years – signalling prices may continue to rise as the global economy shows signs of recovery.
“Oil prices gained on Monday for a fifth straight day, with Brent at its highest since October 2018 and heading for $80, as investors fretted about tighter supplies because of rising demand in parts of the world,” Reuters reported on Monday.
The market witnessed positive crude prices, with Brent rising to $79.53 per barrel, having raised in three consecutive weeks, while US crude futures hit $75.45 per barrel, the highest since July.
Meanwhile, global supplies have tightened due to the fast recovery in fuel demand after the outbreak of the Delta variant of the corona-virus and Hurricane Ida, which hit US production.
Dailyfx.com technical analyst Tammy Da Costa said: “Over the past few weeks, oil prices have continued to proceed along an upward trajectory as commodity shortages remain a key concern for global economies.
“As the vaccination programme continues to gain traction, Europe and China’s energy crisis have [sic] continued to support the bullish narrative pertaining to oil prices over the past month.
“With inflationary pressures on the rise, heightened volatility and production concerns have supported the strong rise in commodities, pushing Brent crude to $80, a level last tested in 2018.”
Oilprice.com oil analyst Tsvetana Paraskova said on Monday: “Just ahead of the winter season, Europe’s natural gas crunch created a snowball effect in global energy markets.
“What started as very low gas inventories in Europe during the summer is now spilling over into oil, natural gas, and coal prices all over the world, with no quick fix or signs of a major short-term correction in sight.”
It seems that the price of crude oil could fall if OPEC and its allies intervene on output gains.
Based on the current fundamentals, the price of crude could reach $85 per barrel anytime soon. However, for this week’s trading recommendation, investors should consider buying crude oil in the range of $72 and $80 per barrel.