With oil prices on the upswing, it may look like a hobbled oil industry is finally regaining its footing. Last week oil prices reached their highest point in over a year, hitting nearly $60 a barrell on Friday.
So are things back to normal? Not quite, says Matt Smith, director of commodity research at ClipperData.
“We’re still a long way from demand recovering to pre-COVID levels in the U.S.,” Smith told Texas Standard. “So gasoline demand is still lagging year-ago levels by about 10% due to ongoing restrictions – you know, working from home, schools on limited schedules, that type of thing.”
The bump in oil prices, Smith says, is an indicator of optimism in the market – that demand will increase some time in the near future.
“The reason for fuel prices rising is essentially that kind of half-glass-full type of thing. So the fuel market knows that there is a post-COVID world appearing on the horizon when demand will return to normal levels. So prices are essentially getting ahead of themselves – pricing in that sort of rosy scenario essentially front-running it.”
Listen to the full interview in the audio player above.
