(Bloomberg) — Oil shot across $90 for the first time since 2014 as winter weather in the U.S. threatened to shut in some production while geopolitical tensions continued to keep investors on edge.
West Texas Intermediate rose as much as 2.4%, trading above $88 a barrel as traders doubted that all members of the OPEC+ coalition will be able to meet their quotas in full even after agreeing to add supply to the market. Meanwhile, extreme cold in the Permian Basin is halting some out in the U.S. most prolific oil field.
Crude is heading for a seventh weekly gain, with banks including Goldman Sachs Group Inc. seeing oil moving toward $100 a barrel. The rally has been underpinned by rising demand, low stockpiles and interruptions to supply. High levels of backwardation in the futures curve, in which near-dated prices are trading at a premium to those further out, continue to signal a tight market.
With oil and gas prices near multiyear highs, supermajor Shell Plc unveiled a bumper set of fourth-quarter earnings on Thursday that comfortably exceeded analysts’ estimates. At the same time, it kept a tight lid on capital spending.
Investors continue to track developments over Ukraine amid concerns that Russia may invade, even though Moscow has said it has no such plan. An attack carries the potential to upend energy flows, stoking prices. Oil historian Daniel Yergin said further escalation over Ukraine could send prices to $100 a barrel, while JP Morgan sees the possibility of $120 oil in that scenario.
Geopolitical tensions are also prevalent in the Middle East, as the United Arab Emirates said three hostile drones that entered its airspace on Wednesday had been intercepted. This comes days after the UAE fended off a missile attack by fighters based in Yemen.
Source: www.worldoil.com
Author: World Oil