Thursday, November 07, 2024

Business

Oil climbs for sixth day on supply concerns, Brent tops $80

Oil climbs for sixth day on supply concerns, Brent tops $80

Oil markets climbed for a sixth day on Tuesday, reversing earlier losses, on fears over tight supply while surging prices of liquefied gas (LNG) and coal also lent support.

Brent crude futures gained $1.05, or 1.3%, to $80.58 a barrel at 0645 GMT, after reaching its highest since October 2018 at $80.75 earlier within the session. It surged 1.8% on Monday.

U.S. West Texas Intermediate (WTI) crude futures rose $1.06, or 1.4%, to $76.51 a barrel, the very best since July 6. It jumped 2% the previous day.

“Investors remained bullish as supply disruptions within the us from hurricanes are continuing for extended than expected at a time when demand is learning thanks to easing lockdown measures and therefore the wider rollouts of COVID-19 vaccination,” said Chiyoki Chen, chief analyst at Sunward Trading.

Hurricanes Ida and Nicholas, which swept through the U.S. Gulf of Mexico in August and September, damaged platforms, pipelines and processing hubs, shutting most offshore production for weeks.

Also weighing on supply, top African oil exporters Nigeria and Angola will struggle to spice up output to their quotas set by the Organization of the Petroleum Exporting Countries (OPEC) until a minimum of next year as underinvestment and nagging maintenance problems still hobble output, sources at their respective oil firms warn.

Their battle mirrors that of several other members of the OPEC+ group who curbed production within the past year to support prices when COVID-19 hit demand, but are now failing to build up output to satisfy soaring global fuel needs as economies recover.

The supply issues are occurring as countries ease their COVID-19 movement restrictions, potentially boosting demand.

Japan, the world’s fifth-biggest oil user, plans to lift a coronavirus state of emergency altogether regions on Thursday because the number of latest cases falls and therefore the strain on the medical system eases, Economy Minister Yasutoshi Nishimura said.

Analysts also say inflation of spot liquefied gas (LNG) and coal may support higher oil prices.

“Oil demand could devour by a further 0.5 million barrels per day, or 0.5% of worldwide oil supply, as high gas prices force a switch from gas to grease consumption,” Commonwealth Bank commodities analyst Vivek Dhar said during a note.

He added that energy prices could rally from here if the hemisphere winter proved colder than expected.

China is within the grip of an influence crunch as a shortage of coal supplies, tougher emissions standards and powerful demand from manufacturers and industry have pushed coal prices to record highs and triggered widespread curbs on usage.

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