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Oil settles up 1.5%; hits multi-year highs on surging demand

CommoditiesOct 11, 2021 03:36PM ET
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© 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 jumped on Monday to the highest levels in years, fuelled by rebounding global demand that has contributed to power and gas shortages in key economies like China.

Brent crude rose $1.26, or 1.5%, to settle at $83.65 a barrel. The session high was $84.60, its highest since October 2018.

U.S. West Texas Intermediate (WTI) crude gained $1.17, or 1.5%, to settle at $80.52, after touching its highest since late 2014 at $82.18.

The pace of economic recovery from the pandemic has supercharged energy demand at a time when oil output has slowed due to cutbacks from producing nations during the pandemic, focus on dividends by oil companies and pressure on governments to transition to cleaner energy.

A U.S. administration official on Monday said the White House stands by its calls for oil-producing countries to "do more" and they are closely monitoring the cost of oil and gasoline.

The Organization of the Petroleum Exporting Countries and allies, together known as OPEC+, have held back from boosting supply even as prices have risen. In July, the group agreed to boost output by 400,000 bpd to restore the 5.8 million bpd in supply curbs left from its 2020 deal to cut production in the wake of the coronavirus outbreak.

Power prices have surged to record highs in recent weeks, driven by widespread energy shortages in Asia, Europe and the United States. Soaring natural gas prices have encouraged power generators to switch to oil.

"Everything is very much focused on the lack of supply returning at a time when demand appears to be roaring back," said Matt Smith, lead oil analyst at Kpler.

"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)."

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

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

"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.

Oil settles up 1.5%; hits multi-year highs on surging demand
 

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Comments (13)
Rodney Dangerfield
Rodney Dangerfield Oct 12, 2021 12:07AM ET
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good thing we went over there and took all those rag heads oil huh that will teach them God bless George Bush and Donald Trump for signing the deal with OPEC and for Joe taking the money all those years we got some great people looking out for us the best money can buy
James Pattison
James Pattison Oct 11, 2021 9:51AM ET
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Inflation is a tax… everyone agrees… and it unfairly burdens the middle and lower wage earners… these policies were meant to make us all poorer and turn us into government dependent…
Ammad Mansoor
Ammad Mansoor Oct 11, 2021 7:35AM ET
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Things will change fast. crude will be trade above 88 usd on this week. Expected triple digit will be on new contract next month
James Pattison
James Pattison Oct 11, 2021 7:35AM ET
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Need a supply shock for that to happen… or a war
Scott Reyes
Scott Reyes Oct 11, 2021 7:35AM ET
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James Pattison we already having supply shocks been having them since March
New Jazenevd
New Jazenevd Oct 11, 2021 6:42AM ET
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Oil price goes to triple digits. Putin and Saudis send postcards to Biden: good job, joe.
soho electronics
soho electronics Oct 11, 2021 5:10AM ET
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remember this is not actual price, this is paper price. nothing now days is running on fundamentals. governments don't buy at this ridiculous prices, they get massive discounts. this game is just the puppet masters ****all that are going short to fatten their wallets
Eduff San
Eduff San Oct 11, 2021 3:28AM ET
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This price still cheap. SHould be 100 soon
hhg nguyen
hhg nguyen Oct 11, 2021 2:36AM ET
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Demand US officials to reopen US PIPELINES and give jobs back to those who lost it along those pipelines.  Biden has hijacked the white house.  Never forget.
Yahaya Abdullahi kky
Yahaya Abdullahi kky Oct 11, 2021 2:36AM ET
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good morning my friend
Benjamin McIntire
Benjamin McIntire Oct 11, 2021 2:36AM ET
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Never forget Jan 6 sedition 🇺🇸🇺🇸🇺🇸
Eldrish eldoran
Eldrish eldoran Oct 11, 2021 1:30AM ET
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Still the warehouse levels are up, so seems only prices are driven by speculation just as the article mentions the increase in long position...
Lars Hellman
LarsH Oct 11, 2021 1:18AM ET
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..$80 check$100 comming
JM Ackerman
JM Ackerman Oct 11, 2021 1:18AM ET
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Joseph Skrapits
Joseph Skrapits Oct 11, 2021 12:13AM ET
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Thanks for the informative update on oil. I'm glad I'm in all oil right now, and I'm watching my investment like a hawk
Benjamin McIntire
Benjamin McIntire Oct 10, 2021 11:20PM ET
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Peak oil v2.0
perplexed76 .
perplexed76 . Oct 10, 2021 11:11PM ET
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greedy opec will see 8$ very soon
Dan White
Dan White Oct 10, 2021 10:53PM ET
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Hopefully OPEC has learned to limit production and keep prices high. No reason to give oil away or ever produce at a loss.
Jay Kurian
Jay Kurian Oct 10, 2021 10:53PM ET
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Dan, you are one of few people in this arena that has rational points. OPEC+ should keep prices high. There is no reason for them to increase production and take money out of their own pockets. US shale is inelastic due to numerous unfriendly constraints and nowhere else around the world is elastic to increase production. On that note- US oil drillers say they are “disciplined” bologne - if they could produce more and fatten their pockets they would.
Ac Tektrader
Ac Tektrader Oct 10, 2021 10:53PM ET
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Jay Kurian American production is increasing....
Hajer Sultan
Hajer Sultan Oct 10, 2021 10:53PM ET
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When the economy of the world collapse, the oil price will collapse too.
jake goldstein
jake goldstein Oct 10, 2021 10:53PM ET
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Ac Tektrader  Read the report.USA production has now been ramped up.
 
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