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Oil rises 4% in week as energy crunch shows no signs of easing

CommoditiesOct 08, 2021 05:01PM ET
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© Reuters. FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, March 24, 2016. REUTERS/Nick Oxford/File Photo

By Jessica Resnick-Ault

NEW YORK (Reuters) -Oil rose on Friday, gaining about 4% on the week as a global energy crunch boosted U.S. prices to their highest in almost seven years as big power users struggle to meet demand.

Even with worldwide demand growing as economic activity rebounds from pandemic lows, the Organization of the Petroleum Exporting Countries and allied producers (OPEC+) this week said they would remain on the path of gradually bringing back production.

Meanwhile the U.S. government said it was monitoring energy markets, but it did not announce immediate action to lower prices, such as a release from strategic petroleum reserves, which further supported the oil market.

Brent crude futures rose 44 cents, or 0.5%, to settle at $82.39 a barrel. Earlier in the week, the global benchmark hit a three-year high of $83.47.

West Texas Intermediate (WTI) crude rose $1.05, or 1.3%, to end at $79.35. That was the highest close for the U.S. benchmark since Oct. 31, 2014.

U.S. gasoline futures also closed at their highest since October 2014 on Friday.

"The fundamental backdrop is one of tight supplies that is going to continue to push these prices steadily higher," said John Kilduff, a partner at Again Capital in New York.

As energy markets have tightened in the face of improved fuel demand, many fear that a cold winter could further strain natural gas supplies. China ordered miners in Inner Mongolia to ramp up coal production to alleviate its energy crunch.

"As other energy prices like natural gas and coal keep pushing higher, upside risks to the oil market have started to build," said Bank of America (NYSE:BAC)'s Christopher Kuplent.

The price run-up has been spurred by soaring European gas prices, which have encouraged a switch to oil for power generation.

Benchmark European gas prices at the Dutch TTF hub on Friday stood at a crude oil equivalent of about $200 a barrel, based on the relative value of the same quantity of energy from each source, according to Reuters calculations based on Eikon data.

"An acceleration in gas-to-oil switching could boost crude oil demand used to generate power this coming northern hemisphere winter," an ANZ commodities analyst said in a note.

ANZ increased its 2021 fourth-quarter crude oil demand forecast by 450,000 barrels per day.

Oil rises 4% in week as energy crunch shows no signs of easing
 

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Comments (3)
Bill Ackman
Bill Ackman Oct 08, 2021 5:12PM ET
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Oil is going much higher shortages all over the place,Opec didnt make the mistake of Oct 2014 again xDDD
Vlad Lozovskiy
Vlad Lozovskiy Oct 08, 2021 9:07AM ET
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Oil will be high.  Biden is a failure.
doug str
doug str Oct 08, 2021 9:07AM ET
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Oil will be high. It has nothing to do with Biden.
Vlad Lozovskiy
Vlad Lozovskiy Oct 08, 2021 9:07AM ET
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doug str  yea, sure!!!! nothing at all
Ok Uzbekistan
Ok Uzbekistan Oct 08, 2021 3:42AM ET
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oil market is nervous. Waiting something negatively. only news of increasing producing may be very bearish like yesterday. must avoid buying at the top price
Lars Hellman
LarsH Oct 08, 2021 3:42AM ET
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or waiting for WTI break out of 80 and then to the 🌝
Ok Uzbekistan
Ok Uzbekistan Oct 08, 2021 3:42AM ET
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Iwan kadarusman
Iwan kadarusman Oct 08, 2021 3:42AM ET
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does oil price would be down
Sherman Shields
Sherman Shields Oct 08, 2021 3:42AM ET
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Iwan kadarusman Speak your lmguage
 
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