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Tuesday, 23 February 2021 18:37

Here is Where Oil is Headed

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(Houston)

Unprecedented freezing temperatures across the south have wrangled most news headlines this week. This is causing a not so surprising collapse in production from the major U.S. manufacturers in the state most affected, Texas. But the lack of demand from refineries is creating a negative pull on oil prices as they are slower to adjust to changing conditions. Sluggish oil prices will be expected to continue despite a 3.5 million barrel shortfall in production because the refineries aren’t in high demand. On top of this demand shortfall, OPEC has announced plans to ramp up production. These combining factors have produced about a 2% decline in WTI crude futures after declining 1% in trading last Thursday. Finally, the Biden administration has set the course to re-engage with the 2015 Iran nuclear agreement, however, Trump-era oil sanctions have not been reversed.


FINSUM: The run-up in oil prices over the last two weeks was driven by inclement weather in the U.S. but look to the finer details of global production in the next couple of weeks to push oil prices back down. Examine related sectors, like the airline industry, to capitalize on these fluctuations.

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