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Oil Update—September 2021

My forecast range for the price of West Texas Intermediate oil in October is $70 to $80 per barrel, which is a five dollar per barrel increase over last month’s range.

Oil prices rebounded strongly in September, aided by a stabilizing or declining COVID-19 cases and the effects from Hurricane Ida. In fact, WTI prices were above $75 per barrel for brief period toward the latter part of September.

With the strength in oil prices, Goldman Sachs, according to a Reuters article, is calling for Brent prices to hit $90 per barrel by the end of the year. WTI prices are usually three to four dollars per barrel less than Brent prices. Although I am not expecting Brent to hit $90 per barrel in October, Brent prices could surpass $80 per barrel.

Adding fuel to the fire, the US will ease air travel in November, and that might push prices up in advance of November. As we around the world slowly acclimatize to the new normal of living with a background level of COVID, I expect economies around the world to continue to strengthen and demand more oil.

OPEC+ is having its monthly meeting in a few days. While I expect it will continue with its current planned increase of 400 thousand barrels per day, one can never be too sure. There are rumors that the US is pressuring OPEC+ to open the taps beyond the planned increase.

Switching topics, in Alberta and Saskatchewan, we are experiencing a surge in COVID cases, primarily affecting those who have not yet been fully vaccinated. Our ICUs are overflowing with COVID patients, which then forces others to defer their health needs. Therefore, I urge people to get vaccinated not only for themselves but also for others.

I hope everyone stays safe and well.

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