Crude surges on global energy crisis; American oil at its highest for 7 years

Pipelines move into Enbridge Inc. crude oil storage tanks at their tank farm in Cushing, Oklahoma on March 24, 2016. REUTERS / Nick Oxford

TOKYO, Oct. 11 (Reuters) – Oil prices rose again on Monday, extending gains by several weeks as an energy crisis affecting major economies shows no signs of slowing amid an upturn in economic activity and restrictions on the supply of major producers.

Brent crude rose 1.18 cents, or 1.4%, to $ 83.57 a barrel at 0603 GMT, after rising nearly 4% last week. US oil rose $ 1.49, or 1.9%, to $ 80.84 a barrel, the highest since late 2014. US crude rose 4.6% through Friday.

Prices have risen as more vaccinated populations have emerged from coronavirus lockdowns, supporting a rebound in economic activity, with Brent advancing for five weeks and U.S. crude for seven.

Coal and gas prices have also risen as economies recover, making oil more attractive as a fuel for power generation, pushing crude markets higher.

“There is no direct information flow, the moves are driven by momentum where cross-market factors involving higher expected inflation are supporting the upward movement in oil prices,” said Kelvin Wong, commodities analyst at CMC Markets in Singapore.

In India, some states are experiencing power outages due to coal shortages, while in China, the government has ordered miners to increase coal production as electricity prices rise. Read more

The energy crisis sweeping the world gives rise to the prospect of a difficult Nordic winter with increasing demand for heating.

Fund managers increased their net long positions in US crude futures and options in the week to October 5, the Commodity Futures Trading Commission said on Friday.

The speculative group increased the combined futures and options position in New York and London from 8,902 contracts to 325,578 during the period, the commissions said.

Drillers in the United States are profiting from rising prices and added five new oil wells last week, the fifth consecutive weekly increase for oil and gas rigs.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, together called OPEC +, decided last week to maintain a steady and gradual increase in production. Read more

OPEC publishes its monthly oil report later this week.

“The market will be interested in demand revisions, given expectations of increased demand due to the switch from gas to oil,” ING Economics said in a note.

Reporting by Aaron Sheldrick; edited by Richard Pullin, Robert Birsel

Our Standards: Thomson Reuters Trust Principles.

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