Oil prices rose on Friday and were expected to rise by nearly 5% this week. We suspect that some industries have begun to switch fuel from high-priced gas to oil, and that the US government is currently freeing oil from its strategic stockpiles.
Edward Moya, a senior market analyst at brokerage firm OANDA, said: Moya points out signs that fuel demand will improve as economic activity recovers and coronavirus restrictions are relaxed, fearing that the cold winter will further weigh on gas supplies.
Mr. Moya has high expectations that “nothing will change the serious supply-demand deficit in the near future.”
Brent crude oil futures rose $ 1.07 (1.3%) to $ 83.02 by 0643 GMT, and West Texas Intermediate (WTI) crude oil futures rose $ 1.11 (1.4%) to $ 79.41.
At the beginning of the week, WTI hit a nearly seven-year high of $ 79.78, while Brent reached a three-year high of $ 83.47.
Oil prices on Thursday after a Bloomberg reporter said in a Twitter post that the US Department of Energy (DOE) is not considering using emergency stockpiles “at this time” or pursuing a ban on oil exports. Has risen.
Analysts at RBC Capital Markets said in a note on Friday, “Another rise in prices could rekindle conversations about whether to take such action (SPR release) to mitigate the rise in energy prices. There is. “
Overall, this week’s rise is driven by soaring gas prices that prompted a switch to oil for power generation and a decision by Russia-led OPEC and its allies to stick to an additional plan of only 400,000 barrels. it was done. Per day of supply in November.
Soaring gas prices and the degree of gas-to-oil fuel conversion will be important factors to watch now, analysts said.
“Accelerating the switch from gas to oil could increase demand for crude oil used for power generation in the coming winter in the Northern Hemisphere,” ANZ commodity analysts said in a memo. US distillate inventories, including the lowest direction to winter since 2000.
ANZ has revised its fourth quarter 2021 crude oil demand forecast upward by 450,000 barrels (bpd) per day.
Analysts at JP Morgan said they have not yet heard of a major switch from gas to oil in Europe’s electricity sector.
“This means that an estimated 750,000 barrels / day of gas-to-oil switching demand under normal winter conditions could be significantly exaggerated,” said a JP Morgan analyst. It is stated in.
By Sonali Paul and Rossan Khasawneh
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