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Oil prices rise to three-year high on back of supply deficit forecasts

CommoditiesOct 15, 2021 03:26PM ET
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© Reuters. FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base/File Photo

By Laura Sanicola

(Reuters) -Oil prices settled at a three-year high above $85 a barrel on Friday, boosted by forecasts of a supply deficit in the next few months as the easing of coronavirus-related travel restrictions spurs demand.

Brent crude futures settled up 86 cents, or 1%, at $84.86 a barrel. Front-month prices, which touched their highest level since October 2018 at $85.10, hit a weekly rise of 3%, its sixth straight weekly gain.

U.S. West Texas Intermediate (WTI) crude futures rose 97 cents, or 1.2%, to $82.28 a barrel. The was up 3.5% on the week in an eighth consecutive weekly rise.

Demand has picked up with the recovery from the COVID-19 pandemic, with a further boost from power generators who have been turning away from expensive gas and coal to fuel oil and diesel.

The White House said it will lift COVID-19 travel restrictions for fully vaccinated foreign nationals effective Nov. 8, which should boost jet fuel demand.

Meanwhile, a sharp drop in oil stockpiles in the United States and the member countries of the Organisation of Economic Co-operation and Development is expected to keep global supply tight.

"It will take a trifecta of events to derail this oil price rally: OPEC+ unexpectedly boosts output, warm weather hits the Northern Hemisphere, and if the Biden administration taps the strategic petroleum reserves," said Edward Moya, senior market analyst at OANDA.

U.S. energy firms this week added oil and natural gas rigs for a sixth week in a row as soaring crude oil prices prompted drillers to return to the wellpad.

The U.S. oil and gas rig count, an early indicator of future output, rose 10 to 543 in the week to Oct. 15, its highest since April 2020, energy services firm Baker Hughes Co said in its closely followed report on Friday.

The International Energy Agency on Thursday said the energy crunch is expected to boost oil demand by 500,000 barrels per day (bpd).

That would result in a supply gap of around 700,000 bpd through the end of this year, until the Organization of the Petroleum Countries and allies, together called OPEC+, add more supply, as planned in January.

Oil prices rise to three-year high on back of supply deficit forecasts
 

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Comments (8)
Batika Mari
Batika Mari Oct 15, 2021 3:36PM ET
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Time to shift to renewable energy. Too much dependent on oil.
Ricardo Diogo
Rcd72 Oct 15, 2021 2:49PM ET
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thank you FED for create us debt to fund and Back speculation ! to achieve ATH for raw material energy and soon food!your transitory inflation 🎻 is going to exceed growth!
lala khan
lala khan Oct 15, 2021 5:58AM ET
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uncertainty come in world market.
New Jazenevd
New Jazenevd Oct 15, 2021 5:51AM ET
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Irresponsible and overly stupid Biden’s policies have devastating impact on energy market. If Reps could have power now, mass media would be full of stories how high gas price disrupts lives of ordinary Americans. Of course, now with Dems in power the lying media keeps silence.
Paco FX co
Paco FX co Oct 15, 2021 2:01AM ET
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This is the last breeze of oil! the real price of oil is no more than 60$!
Karsten Vester
Karsten Vester Oct 15, 2021 2:01AM ET
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You are obviusly wrong
Cory Larson
Cory Larson Oct 15, 2021 2:01AM ET
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So retail/tech can operate with 300%+ margins, but in your esteemed opinion oil deserves 70%. Why don't you get some financing and start your drilling and see how you feel.
John Eisenbeiser
John Eisenbeiser Oct 15, 2021 2:01AM ET
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Not today
Aleksandr Radchenko
Aleksandr Radchenko Oct 15, 2021 1:09AM ET
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oil inventories have risen because buyers are reluctant to pay such a high price. this cartel conspiracy will lead to the collapse of OPEC
Of Lagos
Of Lagos Oct 15, 2021 1:09AM ET
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It’s because of low supply while demand is getting higher by the day.
William Smith
William Smith Oct 15, 2021 12:15AM ET
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Oh how Putin and OPEC love Joe.
Gödz Løvê
Gödz Løvê Oct 14, 2021 11:58PM ET
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nice
 
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