Oil prices surged to seven-year highs on Friday, extending their rally into a seventh week on ongoing worries about supply disruptions fueled by frigid U.S. weather and ongoing political turmoil among major world producers.
Reuters reports that Brent crude rose $2.16, or 2.4 per cent, to settle at $93.27 a barrel having earlier touched its highest since October 2014 at $93.70.
U.S. West Texas Intermediate crude ended $2.04, or 2.3 per cent, higher at $92.31 a barrel after trading as high as $93.17, its highest since September 2014.
Brent ended the week 3.6 per cent higher, while WTI posted a 6.3 per cent rise in their longest rally since October.
The market’s surge accelerated in the last two days as buyers piled into crude contracts due to expectations that world suppliers will continue to struggle to meet demand.
U.S. jobs figures were surprisingly strong in January, despite the presence of the Omicron variant of the coronavirus.
Crude prices, which have already rallied about 20 per cent so far this year, are likely to surpass $100 per barrel due to strong global demand, market strategists said this week.
Reflecting that bullish view, money managers raised their net long U.S. crude futures and options positions in the week to Feb. 1 by 6,616 contracts to 304,013, the U.S. Commodity Futures Trading Commission (CFTC) said.
Some, however, see risks to the rally. Citi Research said it expects the oil market to flip into surplus as soon as the next quarter, putting the brakes on the rally.
“A spike towards $100 crude should not be ruled out in the short run, but downside risks are plentiful, including Omicron setbacks on demand, economic growth concerns and financial market corrections as the central banks fight inflation,” said Bjornar Tonhaugen, Rystad Energy’s head of oil markets.Reuters