Oil prices rebounded again on Monday, with WTI shooting up more than 3% to over $61 per barrel by noon ET.
Oil prices spiked to 13-month highs last week after the Texas Freeze, but prices sagged toward the latter part of the week. But on Monday, a new price rally began, with the price of WTI spiking $1.81 per barrel to $61.05. Brent shot up by $1.73 to $64.64.
The price hike comes shortly after Goldman Sachs forecast that oil prices would climb into the $70s over the next few months, and after it became clear that U.S. oil production and refineries will take a bit of time to resume their normal level of output after the Texas Freeze knocked out oil refineries and oil production.
One would think that the market’s enthusiasm for oil would be somewhat tempered given the moderately bearish news that OPEC+ heavyweights Saudi Arabia and Russia might be on the cusp of a disagreement again over the oil output agreement that the group is set to soon discuss.
As usual, Russia is eager to increase oil production, while Saudi Arabia believes a more cautious approach is warranted.
According to Goldman Sachs, Brent will hit $70 per barrel in Q2—this is a $10 increase from from its previous estimate.
The Texas Freeze knocked out as much as 4 million bpd of U.S. oil production and 6 million bpd of refining capacity last week, IHS Markit said. The production outages have created a tighter supply situation that has been absent for most of the pandemic.
And the market is latching onto that reality, sending WTI prices north of $61.
Oil prices are still below last week’s levels, but by just pennies.
By Julianne Geiger for Oilprice.com
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