Oil headed for a seventh weekly gain, the longest run since December, as a global energy crunch roils markets from Europe to Asia.

Futures in New York extended gains toward $80 a barrel, a level they haven’t hit since 2014. The United States Energy Department said that it had no plans “at this time” to tap the nation’s oil reserves, easing concerns that higher prices could be met with emergency supply.

Crude rallied to the highest since 2014 earlier this week after OPEC+ stuck with plans for a gradual boost in supply next month despite a rapidly tightening market, in part due to the energy crisis. Russia’s offer to ease the gas crunch in Europe and a Financial Times report that the US would consider releasing reserves saw prices tumble more than 3 percent on Thursday. Crude has since sharply reversed those losses.

The economic recovery from the pandemic along with a supply disruption in the Gulf of Mexico following Hurricane Ida had already tightened the market before rising natural gas prices spurred additional demand for oil products like diesel and fuel oil. The squeeze, which is being exacerbated by higher coal prices, has come ahead of an expected increase in fuel consumption over winter.

“Crude oil prices remain firmly underpinned with current gas prices still well into gas-to-oil switching territory,” said Ole Hansen, head of commodities strategy at Saxo Bank A/S. “I still wonder how much of the current rally is pure and simple momentum and fear about what lies ahead in the northern hemisphere winter.”

While Russia is offering some form of respite to Europe with increased natural gas flows, China is still facing power outages and Beijing has ordered its state-owned firms to secure energy supplies for winter at all costs. Chinese fuel oil futures jumped almost 10 percent on Friday as local markets resumed after a week-long national holiday.

Other market news:

*Indian refiners are cranking up operating rates toward full capacity thanks to a rebound in domestic consumption and the energy crunch, which is combining to stoke demand for diesel. Most state-owned companies now plan to run their refineries at near full capacity this month, according to people familiar.

*The U.S. may be heading into winter with the lowest stockpiles of heating oil to meet surging demand in more than two decades. *Saudi Aramco is considering selling a stake in its retail fuels and lubricants business, and could go public on the Riyadh stock exchange, according to people with knowledge of the situation. Bloomberg News— 





Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here