Oil prices rallied on Monday on volatile trade, with some investors profiting after signs of progress in US-Iran nuclear talks, while others followed a bullish sentiment fueled by rising consumption amid continued supply constraints.
Brent crude, which first reached its highest level since October 3, 2014 at $94.00, rose 20 cents, or 0.2%, to $93.47 per barrel as of 0601 GMT. It dropped as low as $92.47 in early trade.
West Texas Intermediate (WTI) crude fell 33 cents, or 0.4%, to $91.98 a barrel, having dived to as low as $91.35 earlier in the session and risen to as high as $92.73.
Both benchmarks rose more than $2 on Friday and pushed their rallies into a seventh week amid persistent concerns over supply cuts fueled by political turmoil among major world producers.
Investors took short-term profits on news suggesting progress in US-Iran nuclear talks, but new purchases resumed after technical adjustments as global supply is expected to remain tight.
On Friday, as the United States enters the final phase of negotiations on the 2015 international nuclear deal, if the United States lifts sanctions on Iran, Iran could boost global supply by increasing oil shipments.
By the way, investors’ expectations for any agreement to be reached in the US-Iran talks are not so positive.
Investment bankers predict Brent will reach $100 a barrel. Because the market remains in a bullish tone, global supply remains tight due to OPEC+’s failure to meet production targets and the US’s determination not to increase production.
Many analysts agree that crude oil prices, which have already risen nearly 20% this year, are likely to exceed $100 a barrel due to strong global demand.
The Organization of the Petroleum Exporting Countries (OPEC) and its Russia-led allies are struggling to meet targets despite pressure from consumers to increase production faster.
In the United States, oil production is still far from pre-pandemic record levels, even as the number of rigs has risen to a record 18 consecutive months.
US distillate demand has been above pre-pandemic levels for months due to strong manufacturing and trucking activities.
Tensions remain high in Eastern Europe, fueled by supply concerns, as the White House said on Sunday that Russia has got the capability to invade Ukraine in a short while, but would still prefer diplomacy.