Oil climbed Friday, topping its all-time high earlier this week and recording another 13-month peak.
West Texas Intermediate crude reached $ 59.74 a barrel Friday, its highest level since January 2020, a promising sign as the industry grapples with slackening demand during the coronavirus pandemic.
However, after a 23% increase so far this year, a leading energy expert warns that the commodity may have taken a head start.
“My personal opinion … is that the price is too frothy, and it doesn’t justify a WTI price above $ 58,” Regina Mayor, global and US head of energy for KPMG, told CNBC’s “Trading Nation” Thursday. .
However, Mayor sees positive signs that market conditions support higher prices than last year’s lows. Lower demand and fears of prolonged lockdowns had turned one crude oil futures contract negative for the first time in history in April 2020.
“Supply is declining. … We are all surprised by how quickly it is necessary to phase out those stocks and bring us closer to the five-year moving average,” said the mayor of the cause of the higher oil prices . “We are [also] I see in real life an improved demand from China and India, although I warn that the China figure is a pandemic comparison for January 2020 vs January 2021, and then there are expectations that demand will increase with vaccinations and more people moving around . “
Those factors support West Texas Intermiate crude oil trading in the low $ 50s, instead of closer to $ 60, Mayor said. She noted that any price above $ 30 for WTI is profitable for the producers.
US inventories fell to their lowest level in 11 months last week. Meanwhile, OPEC capped its offer in February and Saudi Arabia will cut its production by 1 million barrels per day in the coming months.
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