Oil up as industries switch from gas, little sign supply crunch easing
08 Oct 2021
Brent Oil was trading 0.46% up at $82.42.
Oil prices rose on Friday, and were on track for gains of nearly 5% this week, on signs some industries have begun switching fuel from high-priced gas to oil and on doubts the U.S. government would release oil from its strategic reserves for now.
“A lot of catalysts are out there to keep the oil market tight,” said Edward Moya, a senior market analyst at brokerage OANDA. Moya pointed to signs of improved fuel demand as economic activity rebounds and coronavirus restrictions ease, as well as fears that a cold winter will further strain gas supplies.
Expectations are high “that nothing in the immediate future will change the significant supply/demand deficit that is in place”, said Moya.
Brent Crude futures jumped $1.07, or 1.3%, to $83.02 a barrel by 0643 GMT while U.S. West Texas Intermediate (WTI) crude futures rose $1.11, or 1.4%, to $79.41 a barrel.
Earlier in the week, WTI touched a near seven-year high of $79.78, while Brent hit a three-year high of $83.47.
Oil prices rose on Thursday after a Bloomberg reporter said in a Twitter post that the U.S. Department of Energy (DOE) is not considering tapping into its emergency reserves “at this time,” nor pursuing a ban on oil exports
But a DOE source told Reuters that was “not accurate”, adding that all “tools are always on the table” to tackle tight energy supply conditions.
“Another run-up in prices…could reignite the conversation about whether to take such action (SPR releases) to mitigate rising energy prices,” RBC Capital Markets analysts said in a note on Friday.
Overall, the week’s run-up has been spurred by soaring gas prices, which have encouraged a switch to oil for power generation, and a decision by the Organization of Petroleum Exporting Countries and allies led by Russia to stick to plans to add only 400,000 barrels per day of supply in November.
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