Carnarvon Energy : Oil prices remain high

Price chart courtesy Trading Economics (https://tradingeconomics.com/commodity/crude-oil)

Global oil prices hit a seven-year high this week, with some analysts lining up to predict prices could reach as high as US$100/barrel this year. At the time of writing, Crude was up to US$ 87.250 - a jump of almost 16% for the month - and Brent was trading at almost US $90, a jump of more than 14.5% this month.

In mid-January Barron's writer Avi Salzman observed US analysts open interest for June 2022 WTI $100 calls increased by 10 per cent and since September 2021 open interest between $105-$150 per barrel strike prices have increased 14 times.

These observations were backed by big investment banks Morgan Stanley and Barclays, with both tipping average oil price increases towards $100 this year.

Oil prices are up more than 10 per cent this year to date as supplies and OPEC+ struggle to meet targeted monthly output increases. The primary concern is around supply growing too slowly and creating limited capacity to share around the world if demand starts to exceed pre-pandemic levels. With more nations jostling to access supply, prices are being driven up.

Surging prices can also be ascribed to ongoing supply and demand issues created by COVID-19. As Reuters reported on Monday, growing geopolitical tensions between Russia and the Ukraine - the former being one of the world's biggest oil suppliers - also have a part to play.

This week The Sydney Morning Herald pointed out a potential discrepancy in the measure of commercial and controlled stockpiles in nations of the Organisation for Economic Cooperation and Development - about 220 million barrels lower than pre-pandemic levels.

However, the International Energy Agency continues to report the world's stockpiles are about 660 million barrels higher than before the pandemic began.

Regardless of the measure, oil price buoyancy is a positive for Carnarvon as we work with partners to unlock potential in the Bedout Basin, closing in on Dorado FID and hopefully the commercial viability of Pavo-1 and Apus-1 wells in the first half of 2022.