Oil surpasses $ 80, highest in nearly three years | Business and Economy News


Oil has rebounded this year as the vaccine rollout stimulates demand for energy, leading to lower US inventories.

Brent oil has climbed above $ 80 a barrel, a sign that demand is exceeding supply, depleting stocks amid the global energy crisis.

The main crude benchmark rose for a sixth day to its highest level since October 2018, while West Texas Intermediate extended its gains. The latest oil recovery has been accompanied by a wave of bullish price forecasts from banks and traders, further gains in natural gas and speculation that the energy industry is not investing. enough in fossil fuels to maintain supplies at current levels.

Oil has rebounded this year as the rollout of vaccines to fight the pandemic aids demand for energy, leading to lower U.S. inventories. A dramatic increase in natural gas has fueled bets that crude will benefit from overflow demand as users seek alternatives. Trafigura Group, one of the world’s largest commodity trading houses, is among those forecasting higher oil prices.

“It looks like the oil rally still has some legs,” said John Driscoll, chief strategist at JTD Energy Services Pte. “The fundamentals are still fairly convincing, demand is picking up, the offset is increasing. I just don’t see any evidence yet that the rally has come to a head.

As global demand increased, the Organization of the Petroleum Exporting Countries and its allies, including Russia, relaxed supply restrictions with great caution. Later Tuesday, OPEC will release its World Oil Outlook, which will detail the group’s views on market fundamentals.

Prices:

  • Brent for the November settlement rose 1.1% to $ 80.43 a barrel on the ICE Futures Europe exchange at 7:08 a.m. in London.
  • WTI for November delivery gained 1.4% to $ 76.50 a barrel on the New York Mercantile Exchange.

Demand for crude could increase by 500,000 barrels per day as high gas prices force a shift, Commonwealth Bank of Australia analyst Vivek Dhar said in a note. This would tighten markets further, especially with OPEC + only making cautious additions to the supply, Dhar said. On Tuesday, US natural gas rebounded again.

Inventory drawdowns are “the largest on record” and OPEC + cannot restore market equilibrium, Goldman Sachs Group Inc. said in a note earlier this week. The deficit “will not reverse in the coming months, in our view, as its magnitude will exceed both OPEC + ‘s will and ability to ramp up,” he said.

Global oil consumption is expected to return to pre-pandemic levels in the third quarter of 2022, according to BP Plc. Demand is expected to gain an average of 3.8 million barrels per day over one year, BP Singapore chairman Eugene Leong said in an interview.

Oil lead times have widened, signaling that traders are more positive. Brent’s rapid spread was 80 cents a barrel in offsetting, down from 63 cents two weeks ago. It is bullish, with prices closer to the date higher than those further away.

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