The price of oil has been steadily rising, while making higher highs and higher lows.
Oil could be headed for $150 a barrel. That might not be good for the economy, but it would be great news for energy stocks.
Crude prices had been under pressure since peaking in March, as investors fretted about the impact of China’s Covid-19 lockdown on global growth and a potential recession in the U.S. But after getting knocked down as low as $94.29 on April 11, the price of oil has been steadily rising, while making higher highs and higher lows.
That didn’t change this past week, when the price of oil rose 3.3%, a week that might have been the last best chance to avoid another oil breakout. The reason: The Organization of the Petroleum Exporting Countries announced it would raise production targets to 684,000 barrels a day, up from the current 432,000. It was an acknowledgment that, given the combination of sanctions on Russia and China lifting its Covid-19 restrictions, more oil was needed to keep demand from far outstripping supply.
Still, it’s probably not enough, says Helima Croft, head of global commodity strategy at RBC Capital Markets. “We think that too big of a burden is probably being placed on OPEC to offset the economic damage caused by a war involving the world’s commodity superstore,” she explains.
It didn’t help that the European Union announced a limited embargo on Russian oil while U.S. oil inventories fell by 5.07 million barrels, far more than the expected 1.35 million decline. Oil is now trading above $116 a barrel, its highest price since March. That leaves West Texas Intermediate crude, the U.S. benchmark,…