Connect with us

Hi, what are you looking for?

Commodities & Futures

Oil extends rally to multi-year peaks as energy crunch bites

Commodities20 minutes ago (Oct 11, 2021 11:51AM ET)

(C) Reuters. FILE PHOTO: Pipelines run to Enbridge Inc.’s crude oil storage tanks at their tank farm in Cushing, Oklahoma, March 24, 2016. REUTERS/Nick Oxford

By Brijesh Patel

BENGALURU (Reuters) – Oil prices extended gains to scale multi-year peaks on Monday, fuelled by the rebound in global demand that has also contributed to power and gas shortages in key economies like China.

Brent crude was up $1.39, or 1.7%, at $83.78 a barrel by 11:02 a.m. EDT (1502 GMT), after hitting its highest since October 2018 at $84.60 earlier in the session.

U.S. West Texas Intermediate (WTI) crude rose $1.55, or 2%, to $80.90, after touching its highest since late 2014 at $82.18.

The pace of economic recovery from the pandemic, combined with cold weather have supercharged energy demand, coming at a time when pressure on governments to accelerate the transition to cleaner energy has slowed investment in oil projects.

At the same time, the Organization of the Petroleum Exporting Countries and allies, together known as OPEC+, have held back from boosting supply even as prices have risen.

Power prices have surged to record highs in recent weeks, driven by widespread energy shortages in Asia, Europe and the United States. Soaring gas prices are encouraging countries to switch to oil for power generation.

“Everything is very much focused on the lack of supply returning at a time when demand appears to be roaring back,” said Matt Smith, director of commodity research at ClipperData.

“There’s the added dimension relating to the potential for fuel switching given global natural gas prices are so high, so it’s been a combination of factors here that are just continuing to propel (oil higher),” Smith said. [NGA/]

Analysts have estimated that switching from natural gas to oil could add anywhere from 250,000 to 750,000 barrels per day of crude demand.

In India, some states are experiencing electricity blackouts because of coal shortages, while the Chinese government ordered miners to ramp up coal production as power prices surge.

“In broad terms, we have very strong demand for energy around Asia, Europe ahead of the upcoming heavy usage cycle. Oil prices likely to continue to advance here in the near term,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

The U.S. Department of Energy last week said all “tools are always on the table” to tackle tight energy supply conditions, amid questions about whether the Biden administration is considering tapping into its strategic petroleum reserves (SPR) or pursuing a ban on oil exports to bring down the cost of crude oil. [RIG/U]

Oil extends rally to multi-year peaks as energy crunch bites

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

BEST PICKS FOR YOU

I’m going to let you in on a little secret. I got a $750 SHEIN gift card this week and all I had to...

Stock

(C) Reuters. FILE PHOTO: A worker holds a nozzle to pump petrol into a vehicle at a fuel station in Mumbai, India, May 21,...

Sport

Reviewed by Helen Kollias, PhD What is adrenal fatigue? | Symptoms | Science | Treatment Every month, roughly 80,000 people type “what is adrenal...

Disclaimer: Wisegazette.com it's managers and its employees (collectively "The Company") do not make any guarantee or warranty about what is advertised or above. Information provided by this website is for research purposes only and should not be considered as personalized financial or health advice. Copyright © 2021 Wise Gazette. All Rights Reserved