In its February report, the US Energy Information Administration (EIA) said that in March, oil demand would advance to 96.7 million barrels a day. However, the overall supply will be just 93.6 million barrels a day. Notably, the deficit of oil and oil products totals 3.1 million barrels a day. Such a deficit in the oil market creates conditions for a constant rise in oil prices.
Today, on March 11, oil prices rose amid the signs of higher demand in the US. Brent futures for May delivery reached $68.39 per barrel that is 0.72% higher than at the end of the previous session. WTI futures for April delivery settled at $64.41 adding 0.65% compared to the previous session.
The US Energy Department reported on a drop of 11.9 million barrels in petrol inventories and 5.5 million barrels in distillates during the previous week. At the same time, oil reserves increased by 13.8 million barrels. Data on higher demand for petroleum and distillates is boosting oil prices. Thus, in the US, demand for petrol jumped by more than 7%, hitting the highest level since November 2020. Consumption of distillates soared by more than 18% to the level last seen in November 2019.
Experts at EIA are sure that demand for oil will confidently rise until the middle of 2021. They foresee that in the middle of the summer, demand will reach 98.2 million barrels a day. However, the expected figures are still below the pre-crisis levels. The difference is 4 million barrels. Demand for oil is mainly rising due Brazil and OPEC.
The EIA assumes that OPEC will slowly increase oil production in order to meet demand and keep oil prices low. If the alliance maintains the current level of oil production, by July, there will be a shortage of 3.5 million barrels per day. The oil deficit of 3.6% may lead to the depletion of oil reserves. In the light of the global economic recovery, such a situation may significantly influence oil prices. Experts at EIA are confident that in the coming months, oil consumers will compete for it. This will surely result in a surge in oil prices.
OPEC increases oil production when it is necessary, thus controlling its prices. Of course, OPEC will benefit from high oil prices. In case of the market overheating, it may quickly increase production. At the same time, oil prices may jump even higher.
The issue of Middle East policy also remains very important. The international relations of Iran, Saudi Arabia, and the United States can lead to an unexpected result. If the Iranian government acts more prudently, it could push the US authorities to return to a deal discussion. This, in turn, may increase oil exports from Iran and significantly reduce oil prices. At the same time, the attack of the Shiite-Zaydite group on Saudi oil storage facilities may force the Saudi government to keep oil prices lower.
Today, OPEC has all chances to earn large sums of money in the short and long term.