The price of oil rose to its highest level in more than a year on optimism the rollout of vaccines will breathe new life into global economies.
Inoculation hopes and a tightening of supplies from the Organization of the Petroleum Exporting Countries (OPEC) has driven up oil prices in recent weeks to pre-pandemic levels.
U.S. West Texas Intermediate (WTI) crude futures rose 1.5%, past the psychologically important $60 a barrel to hit $60.95 on Monday, a level not seen since early January of 2020.
Brent Crude was up 1.46% to $63.32 a barrel.
Analysts have raised alarms that oil prices could fall dramatically. While Demand for oil is low because of the pandemic, the concern is that producers might bring more supply online at these prices, which would send prices back down.
“The robust recovery in oil prices and industrial metals over the past couple of months is driving the idea of a new commodities supercycle in which prices remain above-trend for many years to come,” Hussein Sayed, chief market strategist at FXTM, said.
In a Feb. 10 note, analysts at JP Morgan warned that “we likely entered an upswing phase of a new commodity supercycle.”
“We believe that the new commodity upswing, and in particular the Oil up cycle, has started,” the note said. “Mostly it will be the story of a post-pandemic recovery (‘roaring 20s’), ultra-loose monetary and fiscal policies, weak USD, stronger inflation, and unintended consequences of environmental policies and their friction with physical constraints related to energy consumption and production.”
Reuters reported that workers will decide on Monday whether to strike at Norway’s largest oil loading terminal, which would further tighten supply. If those workers decide to strike, it could affect fields responsible for a third of the country’s crude output.