Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Oil Up, Looks to End Week with More than 2% Gains as Market Tightens

Published 10/15/2021, 12:27 AM
Updated 10/15/2021, 12:30 AM
© Reuters.

© Reuters.

By Gina Lee

Investing.com – Oil was up Friday morning in Asia and was set to end the week with gains of more than 2%. There are increasing signs of tight supply over the next few months as soaring gas and coal prices are encouraging a switch to oil products.

Brent oil futures rose 0.74% to $84.62 by 12:26 AM ET (4:26 AM GMT) and WTI futures rose 0.68% to $81.86.

Meanwhile, crude oil supply data from the U.S. Energy Information Administration showed a 6.088-million-barrel build for the week ended Oct. 8. This was much bigger than the 702,00-barrel build in forecasts prepared by Investing.com and the 2.346-million-barrel build reported the week before

Data from the American Petroleum Institute, released a day earlier, showed a build of 5.213 million barrels.

However, Organization for Economic Co-operation and Development (OECD) oil stockpiles have declined sharply to their lowest level since 2015. Fuel demand is picking up as economic recovery from COVID-19 progresses, with a turn away from expensive gas and coal to fuel oil and diesel for power giving the black liquid a further boost.

"This energy crisis, particularly in coal and gas, has really pushed up the energy complex higher and oil has benefited as a result," Commonwealth Bank commodities analyst Vivek Dhar told Reuters.

The International Energy Agency said on Thursday that the crisis could boost oil demand by 500,000 barrels per day (bpd), resulting in a supply gap of around 700,000 bpd through the end of 2021. The Organization of the Petroleum Countries and allies (OPEC+) is expected to add more supply in January 2022.

"You're looking at a narrow window where things can tighten considerably, but it's going to be very weather-dependent," said Dhar.

Meanwhile, the global oil market is shaping up for a strong bull cycle, led by supply tightening and demand strengthening at the same time, according to RBC Capital Markets analysts.

"We maintain the view that we have held all year, that the oil market remains in the early days of a multi-year, structurally strong cycle," RBC analyst Michael Tran said in a note.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.