You are here: Home » International » News » Markets
Business Standard

Oil hits multi-year high above $86 due to tight supply, then pulls back

Brent crude rose as high as $86.10, the highest since October 2018, but by 0815 GMT was down 79 cents, or 0.9%, to $85.03.

Topics
Crude Oil Price | Oil industry

Reuters  |  LONDON 

opec, oil prices

Oil hit a three-year high above $86 a barrel on Thursday driven by tight supply and a global energy crunch, although prices eased as some investors took profits on signs the rally is looking overstretched.

Helping to drive the latest gain, a supply report from the U.S. Energy Information Administration on Wednesday showed crude and fuel inventories tightened, with crude inventories at the Cushing storage hub falling to a three-year low. [EIA/S]

Brent crude rose as high as $86.10, the highest since October 2018, but by 0815 GMT was down 79 cents, or 0.9%, to $85.03.

U.S. West Texas Intermediate crude fell 57 cents, or 0.7%, to $82.85.

"We saw some correction, but overall sentiment remained firm as there have been no large increases in output by the United States or OPEC," said Satoru Yoshida, a commodity analyst with Rakuten Securities.

The price of Brent has risen over 60% this year, supported by a slow ramp-up in supply by the Organization of the Petroleum Exporting Countries and allies, and a global coal and gas crunch which has driven a switch to oil for power generation.

Oil also came under pressure from a drop in coal and natural gas prices. In China, coal fell 11% on Thursday, extending losses this week since Beijing signalled it might intervene to cool the market.

"With coal and gas prices easing and with the relative strength index technical indicators still in overbought territory, the odds of a sharp, but material fall in oil prices are rising," said Jeffrey Halley, analyst at brokerage OANDA.

Even so, some analysts are calling for oil to rally even more as OPEC+ is likely to stick to its plan for gradual output increases while demand is expected to reach pre-pandemic levels.

Giovanni Staunovo of Swiss bank UBS said in a report he expected Brent to trade at $90 in December and March.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Thu, October 21 2021. 15:22 IST
RECOMMENDED FOR YOU
.