Oil rose at the start of the week’s trading on evidence that the oil market is tightening amid a worldwide energy emergency. After five weeks of advances, West Texas Intermediate (WTI) surpassed $75 per barrel, while Brent reached its highest level since October 2018. Inventories have been drawing, with U.S. inventories reaching a three-year low. At the same time, a natural gas boom appears to be driving demand for oil as users switch fuels.
Oil has climbed more than 80% in the last year as global demand recovers from the pandemic’s interruption. On the supply side, the Organization of Petroleum Exporting Countries and its allies, particularly Russia, have been gradually lifting output restrictions, permitting markets to tighten.
Furthermore, harsh weather in the United States has hampered local production.
Warren Patterson is the head of commodities strategy at ING Groep NV. According to him, crude continues to be supported by broader concerns about tightness in energy markets. Demand appears to be stronger than anticipated in the near term.
A slew of market observers has predicted significant price hikes on the eve of the fourth quarter and the start of the northern hemisphere winter. Goldman Sachs Group Inc., for example, said the market’s gap was more significant than projected. They boosted its year-end Brent prediction by $10 to $90 per barrel.
According to a commodities forecast, Citigroup Inc. stated that it is still “outright bullish” on crude oil and gas. Natural gas futures in the United States climbed for a third day on Monday. Inventory levels remained low ahead of the heating season. OPEC+ is slated to meet on October 4 to evaluate output policy after keeping with 400,000 bpd supply increases in recent months. Before that, OPEC is scheduled to announce its annual World Oil Outlook on Tuesday.
If prices continue to rise between now and the meeting, Patterson said, “I would not rule out the possibility of even more vigorous easing. Key market time spreads have widened, indicating that traders are increasingly optimistic. Brent’s immediate spread in backwardation was 89 cents per barrel. This shows a bullish pattern with near-dated prices higher than those further out. The spread between the two most recent December contracts has widened to more than $7 per barrel.
The maintenance backlog includes everything from healthy service to the replacement of valves, pumps, and pipeline sections. Companies are also falling behind on plans to conduct additional drilling to maintain stable production. These challenges harmed practically all enterprises in Nigeria, Karim said. Oil Minister Timipre Sylva assured the media last week that Nigeria would reach its quota within a month or two, but he did not specify how. The administration has already stated that a recently enacted oil revamp law will be critical to increasing investment and production. Angola’s finance minister told Reuters that meeting the aim may take years.
In June, Angola’s oil minister, Diamantino Azevedo, decreased its anticipated oil output for 2021 by 27,000 bpd to 1.19 million bpd.
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