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Home Commodities

Oil Prices Near $90 Per Barrel as Oil Market is Running out of Sellers

Rate Captain by Rate Captain
January 24, 2022
in Commodities, Economics, News
Reading Time: 1 min read
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As oil prices continue to surge closing in on $90 per barrel, oil market is running out of sellers.

Reports suggests some of the largest oil drivers such as traders, speculators and investors have all reduced activities in the oil market in the last months.

According to publications from multiple derivate brokers, as worldwide supply of oil declines reaching its lowest figures in years, sale of future contracts by traders is not necessary. Hence, U.S Shale patch producers have shown little interest in looking to lock in future sales.

According to Professor Illia Bouchouev, “The largest player in the futures market is the inventory hedger. When inventories are drawing they cannot hedge, The market has run out of sellers,”

Concurrently, the low selling pressure can explain oil prices rally with respect to irregular equity market and risk assets. While crude has gained more than 10% this year, the S&P 500 is down almost 8%.

According to analysts from Goldman Sachs Group, “producers hedging less or even buying back hedges and more consumers buying,” Goldman analysts including Damien Courvalin wrote in a note. “It is this shift in corporate flows that will contribute to the rally in long-dated prices.”

Meanwhile, in the Nigerian oil market, Bonny light dropped by 1.26%, trading at $89.03 per barrel. The Qua iboe and Brass river declined 2.68% trading at $87.84 per barrel.

Concurrently, External Reserve decreased by 0.08%, concluding trade at $40,3 billion on Thursday, 20th January 2022. This represented a $30.5 million decline compared to the previous day.

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