Global energy crunch: Oil prices soar above $80 for first time in 3 years

Natural gas and coal prices rally to record peaks as traders brace for winter crunch

Brent oil roared above $80 a barrel, the latest milestone in a global energy crisis, on signs that demand is running ahead of supply and depleting inventories.
 
The international crude benchmark hit the highest since October 2018, before paring some earlier gains to trade close to $80. West Texas Intermediate also climbed.
 
Oil’s latest upswing has come with a flurry of bullish price predictions from banks and traders, forecasts for surging demand this winter, and speculation the industry isn’t investing enough to maintain supplies.
 
The jump to $80 is adding inflationary pressure to the global economy at a time when prices of energy commodities are soaring. European natural gas, carbon permits and power rose to fresh records Tuesday, with little sign of the rally slowing. Oil has rebounded from its eye-watering collapse last year amid record output curbs from the OPEC+ group and a global economic recovery that has boosted demand.
 

Prices could hit $90 this year as stock drawdowns deepen, Goldman Sachs Group Isays, while Bank of America Corp has talked up an outside chance of hitting $100 over the winter.  The oil market is a “different picture from the one that was there a month or six weeks ago,” Bake said. “Demand has been good. Oil substitution is happening a lot as natural gas just runs and spirals pricing-wise.”   

UK puts army on standby as fuel pumps run dry
 

The UK officially put the military on standby to help deliver supplies to gasoline stations in an effort to stem a crisis that’s engulfed PM Boris Johnson’s government. A “limited number” of army tanker drivers will be trained up in case they’re needed, the Department for Business, Energy and Industrial Strategy said late on Monday.  
 

Meanwhile, the European energy markets from natural gas to carbon permits jumped to records, signalling the supply shortage will get worse just as the winter season starts.  Stockpiles of everything from gas to coal and Norwegian water for electricity production are dwindling and there are few signs the situation will improve anytime soon as demand continues to roar back from a pandemic-driven lull. 

Many of the UK’s smaller energy suppliers have collapsed, while some French electricity retailers are struggling to supply clients and are also at risk of folding. Dutch front-month natural gas futures surged as much as 12.2 per cent, while carbon futures carbon futures jumped 2.2 per cent. German electricity for next year and UK gas also climbed to new highs. (Bloomberg)