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Oil prices rise, as Saudis dismiss supply concerns as demand grows

CommoditiesOct 14, 2021 03:11PM ET
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© Reuters. FILE PHOTO: A gas pump at a petrol station in Seoul June 27, 2011. REUTERS/Jo Yong-Hak/File Photo

By David Gaffen

NEW YORK (Reuters) -Oil prices rose 1% on Thursday after top oil producer Saudi Arabia dismissed calls for additional OPEC+ supply and the International Energy Agency said surging natural gas prices could boost demand for oil among power generators.

The market largely shrugged off an unexpectedly large increase in U.S. crude inventories as refiners cut production in a generally slower period for those facilities.

Brent crude futures settled up 82 cents to $84 a barrel, a 1% gain, and its highest settle since October 2018. U.S. West Texas Intermediate (WTI) crude futures ended up 87 cents to $81.31 a barrel, notching another seven-year closing high.

Oil demand is set to rise by half a million barrels per day (bpd) as the power sector and heavy industries switch from more expensive sources of energy, the IEA said, warning that the energy crunch could stoke inflation and slow world economic growth.

In its monthly report, the IEA increased its global oil demand growth forecast in 2022 by 210,000 bpd, and now expects total oil demand in 2022 to reach 99.6 million bpd, slightly above pre-pandemic levels.

The White House has been in discussions with oil and gas producers about fuel costs, with retail gasoline prices at seven-year highs and winter heating bills expected to rise. It has also urged OPEC+ to raise output.

"The market is fundamentally tight," said Mike Tran, managing director of global energy strategy at RBC Capital Markets. "Any sort of policy levers that were trying to put a brake on oil market sentiment are a speed bump."

Saudi Arabia dismissed calls for additional OPEC+ production increases, saying the group's unwinding of production cuts was protecting the oil market from wild price swings seen in natural gas and coal markets.

OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, has done a "remarkable" job as so-called regulator of the oil market, Saudi Arabia's energy minister Prince Abdulaziz bin Salman told a forum in Moscow.

At its meeting this month, OPEC+ stuck to its previous agreement to increase output by 400,000 bpd a month.

U.S. crude stocks rose by a surprising 6 million barrels, higher than the 702,000-barrel increase analysts had expected. Production edged higher, reaching 11.4 million bpd. [EIA/S]

U.S. shale producers have been reluctant to invest in raising output after years of weak returns, so U.S. production remains well short of late 2019's record at nearly 13 million barrels per day. On Wednesday, the EIA said output would rebound to 11.7 million bpd in 2022.

"We're up to 11.4 million barrels a day and that’s still a very substantial number, but we have an economy that needs more of that and the European Union that needs diesel and gasoline like crazy," said Tim Snyder, chief economist at Matador Economics in Dallas.

Oil prices rise, as Saudis dismiss supply concerns as demand grows
 

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Comments (6)
Me comment
Me comment Oct 14, 2021 5:15PM ET
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oil, gasoline and natural gas prices are all manipulated it is all part of the world monopoly controlling the prices.
Steffen vdm
Steffen vdm Oct 14, 2021 6:26AM ET
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Why bother looking at these indicators if the experts are surprised 8 out of 10 times. Unless it can be used to manipulate certain things, of course....
perplexed76 .
perplexed76 . Oct 14, 2021 2:22AM ET
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"according to market sources who saw the API data." what the ***does it mean?
perplexed76 .
perplexed76 . Oct 14, 2021 2:21AM ET
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oil manipulators are closing China.
Salvador Hernández Sánchez
Salvador Hernández Sánchez Oct 14, 2021 1:09AM ET
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Bearish , end of contracts in 1 day
rizwan aslam
rizwan aslam Oct 14, 2021 12:27AM ET
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Recession coming
Bob Daniels
Bob Daniels Oct 14, 2021 12:27AM ET
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Coming or already here?
Scott Alexander
Scott Alexander Oct 14, 2021 12:27AM ET
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With rising costs, lack of labor, wages rising, housing bubble all is well.
 
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