Crude oil futures have reached their highest in seven years, and some analysts are suggesting there could be further upside in the market.
As shown on the March futures chart below, oil is now trading at its highest since the autumn of 2014, boosted at least in part by slower-than-expected gains in global production and forecasts from the International Energy Agency that demand is going to exceed pre-pandemic levels later this year. Indeed, oil could reach the $100/barrel benchmark as soon as this summer, according to some industry forecasts.
(Oil’s steep drop into negative territory in early 2020 was of course due to the start of the COVID-19 pandemic, which resulted in widespread lockdowns and a massive, sudden drop in economic activity).
In a Farm Credit Canada ag economic outlook earlier this week, chief economist JP Gervais touched on the rapidly rising price of oil, mostly attributing the market’s strength to concern about whether production can be ramped up quickly enough to meet future demand. Given the strength in oil, Gervais forecast the Canadian dollar will average between 81-82 cents US this year, up slightly from the 2021 average of just under 80 cents.
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