Oil Prices Hit 3-Year High On Draining Inventories

A new optimism is entering the market, with oil prices ending higher on Thursday at what is a nearly 3-year high.

WTI was trading at $73.30, up $0.21 (0.29%) on the day. Brent was trading at $75.55, up $0.36 (+0.48%) on the day at 4:22 p.m. EDT.

The higher prices are welcomed news for the oil markets, and can largely be attributed to falling U.S. inventories, a rosier oil demand outlook, and a statement made by the U.S. government contradicting Iran's earlier statement that the U.S. had agreed to lift all sanctions related to Iranian crude oil.

For U.S. shale drillers that have suffered a year-long coronavirus battle that sank oil prices, this is welcome news.

For oil-rich Alberta, too, the higher prices-even if they turn out to be just temporary-could be the lifeline that it needs.

For Alberta, this sharp rise in oil prices can make its budget. In fact, every day that oil prices stay at this level means another $10 million - $15 million to Alberta's budget.

"We receive a lot of revenues from royalties on oil and gas sales, and when prices are high, that means revenues of oil producers are high and the royalty payments that they make are high," economist Trevor Tombe told the Global News today.

Each dollar change to the price of oil this year is worth $230 million to Alberta's bottom line, Tombe added. Alverta has budgeted on $46 oil this year and $56 oil in 2023 and 2024.

Even with the possibility of OPEC easing its production quotas a likely one, oil prices have continued to rise.

Continental's Harold Hamm on Thursday said that $100 sure was possible. 

By Julianne Geiger for Oilprice.com

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