Financial Markets & Economies Week 6
Markets were trending higher this week. An equity momentum is still evident compared to lower yielding bonds. Asset prices were increasing with oil crossing the $60 mark for the first time since January 2020. Investors are betting on recovery as analysts say. Although renewable energy is gaining popularity in the short to medium term oil is still essential to our everyday lives. Besides oil, precious metals such as gold are also on a rise.
The specific reasons for this increase in oil price according to the people at Investopedia is:
1) OPEC+ maintained its large outputs cuts and high compliance
2) U.S. crude stockpiles falling to their lowest since March
3) A weaker dollar
4) New cases falling in the U.S.
5) Cold weather in North America and Asia
6) Rising demand in China
Based on these factors it is safe to assume that as covid cases fall in different countries around the world and oil demand rises as a result, the oil price is likely to go higher. Recall in previous newsletters where we mentioned that some analysts and industry professionals believe that oil can reach $70 this year. This will certainly be beneficial for oil and oil services companies while also being indicative of a growing economy overall.