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Oil prices rise to three-year high on back of supply deficit forecasts

CommoditiesOct 15, 2021 20:26
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© Reuters. FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base/File Photo

By Laura Sanicola

(Reuters) -Oil prices settled at a three-year high above $85 a barrel on Friday, boosted by forecasts of a supply deficit in the next few months as the easing of coronavirus-related travel restrictions spurs demand.

Brent crude futures settled up 86 cents, or 1%, at $84.86 a barrel. Front-month prices, which touched their highest level since October 2018 at $85.10, hit a weekly rise of 3%, its sixth straight weekly gain.

U.S. West Texas Intermediate (WTI) crude futures rose 97 cents, or 1.2%, to $82.28 a barrel. The was up 3.5% on the week in an eighth consecutive weekly rise.

Demand has picked up with the recovery from the COVID-19 pandemic, with a further boost from power generators who have been turning away from expensive gas and coal to fuel oil and diesel.

The White House said it will lift COVID-19 travel restrictions for fully vaccinated foreign nationals effective Nov. 8, which should boost jet fuel demand.

Meanwhile, a sharp drop in oil stockpiles in the United States and the member countries of the Organisation of Economic Co-operation and Development is expected to keep global supply tight.

"It will take a trifecta of events to derail this oil price rally: OPEC+ unexpectedly boosts output, warm weather hits the Northern Hemisphere, and if the Biden administration taps the strategic petroleum reserves," said Edward Moya, senior market analyst at OANDA.

U.S. energy firms this week added oil and natural gas rigs for a sixth week in a row as soaring crude oil prices prompted drillers to return to the wellpad.

The U.S. oil and gas rig count, an early indicator of future output, rose 10 to 543 in the week to Oct. 15, its highest since April 2020, energy services firm Baker Hughes Co said in its closely followed report on Friday.

The International Energy Agency on Thursday said the energy crunch is expected to boost oil demand by 500,000 barrels per day (bpd).

That would result in a supply gap of around 700,000 bpd through the end of this year, until the Organization of the Petroleum Countries and allies, together called OPEC+, add more supply, as planned in January.

Oil prices rise to three-year high on back of supply deficit forecasts
 

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Comments (5)
Phil Long
Phil Long Oct 17, 2021 8:58
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peak oil is coming
Zen Cat
ZenCat Oct 16, 2021 10:30
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Funny how this is rising toward 90 but just a few months ago those who were making calls for even higher prices were being ridiculed. Made big bucks thanks to their shorts. TY :)
Gautam Banerjee
Gautam Banerjee Oct 16, 2021 10:19
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The price of crude oil is set to fall to 77 or 76 or even lower as the artificial fragile high price props crack and tumble.
Matt Hester
Matt Hester Oct 15, 2021 14:08
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The oil investors are setting themselves up for are hard fall. By keep going long in oil and gas, and now prices extremely inflated, industry can’t afford energy at these prices, as just come out pandemic,so they shut up shop, incoming chain reaction job losses etc, another big recession caused by these fools will wipe oil out.
Arno Pfohl
Arno Pfohl Oct 15, 2021 14:08
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it was all part of the plan.
Michael Song
Michael Song Oct 15, 2021 14:08
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they increase the prices..inflation comes..nothing is shutdown..dont worry.
Arno Pfohl
Arno Pfohl Oct 15, 2021 4:21
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yeah. amazing how inventories are nearly at all time high in surplus oil however there is a shortage.
 
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