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Oil prices are rising but supply is not responding

by LLB Reporter
26th Oct 21 11:22 am

Glasgow’s COP26 summit will again remind policymakers and the public of where the world is now, in terms of its energy consumption and carbon footprint, and where it needs to be by 2050 according to 2016’s Paris Agreement but the resurgence in oil and gas prices – and therefore fuel and heating costs – means that a lot of consumers and corporations will be looking with concern at how the transition period is going to be managed.

AJ Bell Investment Director Russ Mould said: “Demand for energy is rising yet supply growth does not seem to be keeping pace. The last time Brent crude oil traded at $86 a barrel, in November 2010, over 3,000 oil rigs were active worldwide but only half that figure is drilling and producing now, according to data from Baker Hughes.

“The global rig count in September was up 42% year-on-year but activity still seems very subdued compared to prior surges in oil and gas prices.

“Environmental campaigners will view this as a good thing and as evidence that the globe is working hard to wean itself off its addiction to hydrocarbon-based fuels, in favour of more renewable alternatives, even allowing for technological improvements in productivity per rig.

“Baker Hughes’ data goes back to 1975 and on the 25 occasions when oil ended a month trading between $75-90 a barrel the worldwide rig count has only been lower twice. Both of those instances came this year, in June and July.”


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