You are here: Home » Markets » Commodities » Energy
Business Standard

Buoyed by power crunch, Brent crude oil crosses $86-mark

Brent crude oil futures were up 13 cents, or 0.15 per cent, to $84.73 a barrel at 9.00 pm ist, after hitting $86.04, their highest level since October 2018

Oil Prices | Brent crude | Crude Oil Price

Reuters  |  London 

oil prices
Photo: Reuters

hit multi-year highs on Monday, buoyed by recovering demand and high natural gas and coal prices encouraging users to switch to fuel oil and diesel for power generation.

oil futures were up 13 cents, or 0.15 per cent, to $84.73 a barrel at 9.00 pm ist, after hitting $86.04, their highest level since October 2018.

US West Texas Intermediate (WTI) crude futures climbed 22 cents, or 0.27 per cent, to $82.5 a barrel, after hitting $83.73, their highest since October 2014. Both contracts rose by at least 3 per cent last week.

“Easing restrictions around the world are likely to help the recovery in fuel consumption,” analysts at ANZ bank said in a note, adding that gas-to-oil switching for power generation alone could boost demand by as much as 450,000 barrels per day in the fourth quarter.

Cold temperatures in the northern hemisphere are also expected to worsen an oil supply deficit, said Edward Moya, senior analyst at OANDA.

“The oil market deficit seems poised to get worse as the crunch will intensify as the weather in the north has already started to get colder,” he said. “As coal, electricity, and natural gas shortages lead to additional demand for crude, it appears that won't be accompanied by significantly extra barrels from Opec+ or the US,” he said.

Prime Minister Fumio Kishida said on Monday that Japan would urge oil producers to increase output and take steps to cushion the impact of surging costs on industry. Chinese data showed third-quarter economic growth fell to its lowest level in a year hurt by power shortages, supply bottlenecks and sporadic Covid-19 outbreaks.

China's daily crude processing rate in September also fell its lowest level since May 2020 as a feedstock shortage and environmental inspe­c­­tions crippled operations at refineries, while independent refiners faced tightening crude import quotas. “Demand is outstripping supply heading into the winter months, and this should safeguard upward pressure on oil prices,” said Stephen Brennock at broker PVM.

“The $80 a barrel level continues to offer plenty of support and a revisit above $85 could trigger an acceleration towards $90. Yet this is by no means a foregone conclusion.”

(This story has not been edited by Business Standard staff and 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: Tue, October 19 2021. 01:04 IST