(US price per barrel)
Corona has hit economies from all over the world, and one of the hardest hit was Oil. With lockdowns all over the world, no one is out driving there cars. Oil went from $56.99 a to $38.96 in 2020.
The price of West Texas Intermediate (WTI) crude oil is expected to reach an average of 45.78 U.S. dollars per barrel in 2021. Low oil price outlooks are a because of the continued spread of the coronavirus pandemic, which impacted economies around the world since early 2020.
What causes price volatility?
Oil prices are historically volatile. While mostly molded by supply and demand like all other consumer goods, they may also be affected by production limits, a change in U.S. dollar value, and to an extent, by market speculation. The average price of WTI peaked in 2008, at almost 100 U.S. dollars per barrel. Multiple factors, such as strikes in Nigeria, an oil sale stop in Venezuela, and the continuous increase in oil demand from China were partly responsible. Higher oil prices allowed the pursuit of extraction methods previously deemed too expensive and risky, such as shale gas and tight oil production in the United States. The widespread practice of these extraction methods made the United States the biggest oil producer in the world.
What are benchmark crudes?
West Texas Intermediate is often used as a reference point for oil, called a benchmark (or ”marker”) crude. This category includes Brent crude from the North Sea, Dubai Crude as well as blends in the OPEC reference basket. UK Brent has been selling at a higher annual spot price than WTI, largely due to increased oil production in the United States.
WTI oil is a benchmark all over the world, but with the pandemic, there prices dropped drastically. But there is a light at the end of the tunnel. Oil prices are back on the rise, expecting to go up roughly $8 in price this year.