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Oil hits 3-year highs due to supply shortages

On Monday, Brent crude traded at $79.25 a barrel, while WTI crude rose by 97 cents to $74.95.

According to ANZ Research, oil reserves across all the regions are going through supply shortages.

Last week, the American Petroleum Institute reported crude oil reserves falling by 6.108 million barrels for the week ended September 17. In contrast, analysts expected a drop of 2.4 billion barrels.

The US EIA reported on Wednesday that crude reserves fell to the lowest level in nearly three years during the previous week.

Reserves are now at their lowest levels since October 2018, and that tension, coupled with strong demand, has helped boost oil prices.

Stocks also benefited from eased tensions about Evergrande, while Germany’s election outcome created some relied.

Analysts believe that demand will have a bigger influence on prices as concerns about the pandemic diminish.

As for the supply, OPEC and its allies could not pump enough oil in August to meet global demand. As the world recovers from the coronavirus pandemic, upward pressure on oil prices could increase.

However, if the dollar strengthens, gains could be limited.

The natural gas price soared by 3.83% to $5.39 per mmBtu in New York.

Last week, natural gas futures recovered from a technical correction and closed the week with increases. Analysts believe that the drop was driven by reports of milder temperatures and some improvements in Hurricane Ida’s damage to production facilities.

Bullish traders know that medium and long-term fundamentals are favorable for prices to rise later in the year. The prices fell to approach a value zone between $4,867 and $4,649 before new value-seeking buyers stepped in at $4,879 to stop the price decline.

EIA reported that domestic natural gas supplies increased by 76 billion cubic feet in the week ending September 17. This figure is higher than the increase that analysts predicted.

For the short term, analysts think that milder temperatures could limit prices this week. However, the market remains well supported. So, buyers are likely to continue entering the market.

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