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Crude oil prices extend gains on tight global supply and stronger fuel demand as economies recover from pandemic

October 26/2021

MOSCOW (MRC) -- Oil prices extended pre-weekend gains on Monday to hit multi-year highs, lifted by tight global supply and strengthening fuel demand in the United States and beyond as economies recover from pandemic-induced slumps, reported Reuters.

Brent crude futures rose by USD1.10, or 1.3%, to USD86.63 a barrel by 1406 GMT, the highest since October 2018.

US West Texas Intermediate (WTI) crude futures rose USD1.46, or 1.7%, to USD85.22 and reached their highest level since October 2014.

Both benchmarks closed last week with slight gains despite rising coronavirus cases in Britain and Eastern Europe, signaling a potentially difficult winter ahead.

"The global energy supply crunch continues to show its teeth, as oil prices extend their upward march this week, a result of traders pricing in the ongoing rise in fuel demand - which amid limited supply response is depleting global stockpiles," said Louise Dickson, senior oil markets analyst at Rystad Energy.

Goldman Sachs said a strong rebound in global oil demand could push Brent crude prices above its year-end forecast of USD90 a barrel. The bank estimated gas-to-oil switching could contribute at least 1 MM barrels per day (bpd) to oil demand.

After more than a year of depressed fuel demand, gasoline and distillate consumption is back in line with five-year averages in the United States, the world's largest fuel consumer. Meanwhile, US energy companies last week cut oil and natural gas rigs for the first time in seven weeks even as oil prices rose, energy services firm Baker Hughes Co said on Friday.

Oil prices have also been bolstered by worries over coal and gas shortages in China, India and Europe, which spurred fuel switching to diesel and fuel oil for power.

As MRC informed before, US commercial crude stocks fell 3.48 million barrels to 413.96 million barrels in the week ended Sept. 17, to more than 8% below the five-year average, Energy Information Administration data showed. Stocks were last lower Oct. 5, 2018.

We remind that in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.

We also remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.


mrcplast.com
Author:Margaret Volkova
Tags:Europe, crude and gaz condensate, petrochemistry, UK, India, China, USA.
Category:General News
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