- Oil extends gains, near recent multi-year peak
- No immediate signs of easing supply crisis – Analyst
- Fuel switching, improving demand are driving prices up
SINGAPORE, Oct 8 (Businesshala) – Oil prices rose on Friday, with some industries starting to switch from higher-priced gas to oil and doubts the US government would release oil from its strategic. Reserve for now.
“There are a lot of catalysts to keep the oil market tight,” said Edward Moya, a senior market analyst at brokerage OANDA, “with signs of improving economic activity and fuel demand amid fears of freezing coronavirus restrictions.” Due to the cold there will be more pressure in the gas supply.
“Expectations are high that nothing will replace the significant supply/demand deficit” in the immediate future, Moya said.
Brent crude futures jumped 93 cents, or 1.1%, to $82.88 a barrel as of 0409 GMT.
US West Texas Intermediate (WTI) crude futures climbed 97 cents, or 1.2%, to $79.27 a barrel.
Earlier in the week, WTI touched a seven-year high of $79.78 while Brent touched a three-year high of $83.47.
Commonwealth Bank analyst Vivek Dhar said in a note, “The US Department of Energy said there are no plans ‘at this time’ to tap into US strategic oil reserves to calm the rally in oil prices, after Oil prices went up.”
However, a source in the US Department of Energy told Businesshala that a social media post by a Businesshala reporter that said the department was not “at this time” considering tapping into the Strategic Petroleum Reserve (SPR) was not accurate. , while adding all the “tools” are always on the table” to deal with tight energy supplies.
“Another run-up in prices, especially with Brent breaking the $85/bbl mark, is such an action to reduce rising energy prices,” Michael Tran, commodity strategist at RBC Capital Markets, said in a note. (SPR release) may resume talks.” Friday.
Overall, the run-up to the week has been encouraged by rising gas prices to switch to oil for power generation and by some industries, with a decision by the Organization of the Petroleum Exporting Countries and Russia-led allies, OPEC+, said to stick, plans to add only 400,000 barrels of supply per day in November.
Analysts said a jump in gas prices and the extent of the fuel switching from gas to oil will be important factors to watch now.
“The rapid increase in gas-to-oil switching could drive demand for crude oil, which could be used to generate electricity in the northern hemisphere’s winter,” ANZ Commodity Analyst said in a note. Their lowest level in winter since 2000.
Analysts at JPMorgan said they had yet to hear about significant gas-to-oil switching in the European power sector.
“This means that under normal winter conditions the expected 750,000 barrels per day of gas-to-oil switching demand could be significantly higher,” analysts at JPMorgan said in a note.