The price for a barrel of West Texas Intermediate topped the $90 mark for the first time since 2014 Thursday, as the Enverus domestic rig count rose to 720, 63% more than a year ago.
Absent some major news out of China, basically every market indicator at this point is bullish on continued increases in crude prices, meaning that projections by J.P. Morgan and Goldman Sachs for $100 oil prices later in 2022 could in fact become a reality before spring. It could come even sooner than that, depending on what Vladimir Putin and Russia decide to do vis a vis Ukraine in the coming weeks.
Of course, higher oil prices tend to lead to more drilling in the U.S. domestic industry. During a normal business environment, we might expect the U.S. industry to drill itself out of a state of prosperity, as it has regularly done in the past, creating a supply surplus that would cause prices to recede.
In fact, Biden is so dead set on hampering the domestic oil industry that today’s price and rig count news comes even as the U.S. Senateof a long-time anti-oil industry activist, Sarah Bloom Raskin, to be the next vice chairman of the Federal Reserve. Ms. Raskin is just the latest in a long line of industry opponents the President has appointed to senior position in his administration.
If everyone would get out of the industry’s way, the current high prices would, as in the past, likely be a temporary phenomenon. But things are different now, and this is no normal business environment. Thus, unless something changes, crude prices seem to have no way to go but up.
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