Oil Prices Rise More than 70%, Hits 3-Year High in 2021
With price per barrel at $50 in January 2021, crude hits as high as $86 down the year, rising more than 70% before closing at $71 per barrel in the global market as demand outpaced supply.
In its latest report, the US Energy Information Administration (EIA) attribute the surge in crude oil prices in 2021 to an increased global petroleum demand that outpaced supply growth.
This was supported by decisions to review lockdown measures across the globe, which paved way for productivity activities to resume – albeit on a gradual scale.
Rising COVID-19 vaccination rates, easing restrictions and economic recovery have resulted in a faster increase in global petroleum demand compared with supply, the EIA noted.
The spot price of the benchmark Brent crude began fiscal year 2021 at $50 per barrel and jumped to a high of $86/b in late October before declining as the year ended, according to the agency.
The annual average of Brent for 2021 was $71/b, the highest in the past three years, the EIA said. West Texas Intermediate crude oil closely followed Brent’s pattern and averaged $3/b less than Brent for the year.
The slower increase in global petroleum production can be attributed mainly to crude oil production cuts by the Organization of Petroleum Exporting Countries and their allies, or OPEC+, which started late 2020, the EIA said.
Estimates from the EIA’s December 2021 Short-Term Energy Outlook report showed that 2021 US crude oil production fell by 0.1 million barrels per day from 2020 levels and by 1.1 million b/d from 2019 levels.
The February cold snap and hurricanes in August contributed to the decrease, but other factors include lower investment from US oil producers since mid-2020, according to the EIA.
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