Oil demand hits three-year high as prices approach $ 90 a barrel and inflation soars
Oil prices hit their highest level in three years, hitting $ 80 a barrel, while demand remains strong and supply decreases. Rising oil prices suggest that global inflation will last longer than expected, forcing central banks to take action.
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Goldman Sachs has adjusted its Brent oil price to $ 90 a barrel by the end of the year, Reuters reported, saying “the current deficit in global oil supply and demand is larger than expected, with a recovery in global demand after the impact of the Delta even faster than our above consensus forecasts ”.
Global oil demand is expected to exceed pre-pandemic levels early next year, according to OPEC, raising its forecast for 2022 from just under one million barrels per day to 100.8 million barrels per day, more than the demand level of 100.3 million barrels in 2019, reports The Wall Street Journal.
Oil prices and inflation levels are generally linked in some type of cause and effect relationship. As oil prices rise, inflation follows. Likewise, as oil prices fall, inflationary pressures begin to ease. With the rise in oil prices, the Federal Reserve is now indicating that inflation may persist a little longer, although it has previously argued that the rise in inflation will be short-lived.
“Inflation is high and likely will stay that way in the coming months before it moderates,” Fed Chairman Jerome Powell said at the bank’s latest strategy session, MarketWatch reported.
The Fed raised its estimate of average inflation this year to 4.2% from 3.4% last Wednesday. Earlier this year, the Fed expected inflation to average only 1.8% in 2021. The Consumer Price Index shows that average inflation rates for the year would be even higher, at 5.3%.
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Last updated: September 27, 2021
This article originally appeared on GOBankingRates.com: Oil demand hits three-year high as prices approach $ 90 a barrel and inflation soars