Crude oil has been on a bullish trend since April 2020, after US WTI Crude dived to $-37.50 as a result of the coronavirus outbreak, coupled with a shortage of oil tankers which left no room for US oil producers to store oil. As a result, they were dumping it at any cost, and even paying for it. Now, two years later, everything has changed, with US Crude Oil pushing above $100 recently, and today, buyers have become even more confident, giving oil another push to $111.
Global manufacturing recovered pretty quickly after the dive during the major lockdowns in spring 2020 ,and the activity has been increasing since then, which has booted the demand for crude oil. Besides that, all that cash that has been spent by governments and central banks across the world has been helping all markets, with some of those funds spilling into crude oil.
But, there’s another reason too. The world is pushing towards green energy, which is great and everyone approves of it, but it is a big hassle to convince everyone to get rid of their diesel cars and make the shift. So, the dive to $-37.50 two years ago might have been an attempt to push people in this direction. But, that didn’t work, and now the plan might be to hike the price in order to make petrol and diesel too expensive for the man in the street. That would drive the public towards renewable energy.
OPEC is also falling in line, as they continue to keep the status quo, only increasing slightly by 400k barrels/day. In today’s meeting, OPEC+ agreed to raise oil output by 400k bpd in April. That was quick, but surely anticipated, as the expectation was for them to stick with the status quo in a rather straightforward meeting. This will keep the market focused on the Russia-Ukraine situation for the most part.