Mohammed El-Erian, Allianz Chief Financial Advisor and Chairman of Gramercy Fund Management, didn’t take long to curb the enthusiasm of the most bullish on oil prices, in particular of those who see the prices of WTI and Brent at a step from the threshold of 100 dollars a barrel.
Among other things, oil prices have been turning around for about three weeks, conditioned by the strengthening of the US dollar and speculation on the possibility that US President Joe Biden will increase the supply of oil by drawing on US strategic reserves.
Today the WTI contract traded on Nymex loses 1.19% to $ 79.83 a barrel. Brent also fell by 1.2%, falling to $ 81.18 a barrel.
Asked by the CNBC on the occasion of the ADIPEC energy conference underway in Abu Dhabi, El-Erian has hinted that, on the one hand, global markets have evidently shown too bearish a view, considering how many have been surprised by the surge in crude prices – and also natural gas prices – in the reopening phase of the economy following the Covid-19 pandemic.
El Erian on oil: markets like sleepwalkers as prices soared with reopening
The markets, said the former Pimco, agreeing with what was uttered by Sultan Ahmed Al Jaber, CEO of Abu Dhabi National Oil Company, on the one hand found themselves bogged down in global energy crisis – also known as the Global Energy Crunch – as if they had been awakened from a state of “sleepwalking”. On the other hand, the investor crippled the outlook for crude oil prices up to $ 100.
“If you focused only on the supply side, then you could think of the $ 100, as the sector has faced a drop in investment, in general, in the face of demand that is and will remain robust,” El said. -Erian – However, if you look at what is happening to the question, some questions arise. The demand is strong today, but will it be strong in six months? There are big questions about the destruction of demand – the phenomenon where people buy less as prices have become too high – and which also fuel doubts about the possibility that the offer is really in a phase of contraction or not “.
At the beginning of November, OPEC + – an alliance between OPEC and non-member countries, in the latter case such as Russia – confirmed its choice to continue to place on the markets, every month and gradually, an additional amount of oil equal to 400,000 barrels per day every month, until the end of 2022.
Joe Biden’s United States have more than turned up their noses because, in the face of the expensive energy and in general in the face of the expensive life and gasoline that Americans are facing every day, they had hoped that the alliance would increase supply, thus bringing down oil prices.
“The idea that Russia, Saudi Arabia and other big producers don’t offer more oil, to allow people to get gas and go to work, for example, is not right,” Biden commented. occasion of the G20 meeting in Rome.
An article by the CNBC recalled that, since the beginning of March 2021, natural gas prices have jumped in the European Union up to + 618%, marking a rally equal to + 127% for the United States, against coal prices which, again in the EU, have flown up to + 334%.