Oil prices have hit their highest point in five months due to geopolitical tensions and increased demand from manufacturing and cold weather. The US is contributing to supply concerns as a larger exporter, but some analysts believe the surge may not last. They suggest that historical market resilience and US production increases could lead to price declines. However, speculative activity may also be driving up prices, and gasoline prices are rising as well, potentially impacting consumer demand.
Oil prices surged in early 2023, driven by high demand and supply cuts by OPEC. OPEC is unlikely to change these cuts anytime soon, keeping supply low. Additionally, consolidation in major oil-producing areas suggests more controlled production, further supporting prices. Investors are keeping an eye on the Energy Select Sector Fund (XLE), which tracks oil prices and has seen strong performance recently.
