The international price of crude oil has been rising since the dramatic plunge in April 2020 when the world reeled from the global lockdowns and restricted movement of people. The destruction of demand happened suddenly and suppliers all over the world were considering drastic options since storage was running out for produced crude.
A bit more than a year later and the crude oil price has reached peaks that it has not seen in 3 years. The average price in September for crude both at Cushing and in Europe has been above $70 and in the past days has come within grasp of $80.
Energy commodities continue to rise due to gas shortages in Europe which has served to pull coal and crude prices along.
According to oilprice.com, recovering oil demand and an underwhelming supply response, coupled with expected higher oil consumption in a gas-to-oil switch, are tightening the crude market and deepening the backwardation in the futures curve—a sign that market participants believe supply will continue to be tight.
Analysts believe, however, that global oil prices will continue to rise amid surging demand and tight supplies.
Investment bank Goldman Sachs said Brent could hit $90 per barrel by the end of the year, projecting that rising input costs, higher gas prices and weaker growth were likely to weigh on European corporate profit growth for 2021.
“When growth slows, it becomes harder for companies to pass on higher input costs, which is the main risk for net income margins,” the company said.
Minister of Energy and Energy Industries, the Honourable Stuart R Young, M.P., expressed optimism recently that T&T could benefit from higher prices.
It should be noted that T&T prices crude prices are typically pegged to Brent prices.
T&T production, however, has actually improved slightly in May—the Ministry of Energy and Energy Industries reported production of over 61,000 barrels per day. The production rate has not been above 60,000 barrels per day since July 2018.
This is largely due to increased production from BHP from just over 4,000 barrels/day in April to almost 7,000 barrels per day in May. The increase in BHP’s production is from production off of the Ruby development.
BHP anticipates that production from Ruby when ramped up will contribute 16,000 barrels/day and 80 mmscf/d of natural gas.
BHP achieved first production in May 2021.
