Oil Rises Again With Brent At Three Year High

Oil Rises Again With Brent At Three Year High
Shrinking crude supplies have driven Brent to the highest close in three years.

Brent crude futures settled at the highest level in almost three years as supplies shrink at a time when a global energy crunch makes it increasingly likely oil will be tapped for power generation.

The global benchmark crude rose 1.4% on Thursday to close at the highest level since October 2018, while U.S. crude futures advanced 1.5%. U.S. equities rallied and the dollar weakened, boosting the appeal of commodities priced in the currency. 

Oil inventories are rapidly tightening. Supplies in the U.S. are at the lowest since 2018 with output levels weaker after recent U.S. Gulf Coast storms, while stockpiles at a key hub in Europe remain below average levels for the time of year. 

Some of the world’s largest oil traders and banks are predicting crude prices to surge even higher this year. Vitol Group sees oil rising above $80 a barrel, partly as surging gas prices boost demand for crude in power generation. Goldman Sachs Group Inc. said crude may top $90 if the coming winter in the northern hemisphere proves colder than normal.

Crude futures have steadily climbed higher this month as traders weigh the impact of a tightening natural gas market on the broader energy complex over winter. The focus has led to cross-commodity flows across the oil and gas markets, some of which have been unwound in recent days, which had helped to push crude higher.

“We’re still not seeing a very robust recovery in U.S. production levels, so we have a situation where demand is deemed to look a little bit better and the supply side is at risk of not delivering what we thought,” said Bart Melek, head of commodity strategy at Toronto Dominion Bank. 


  • West Texas Intermediate for November settlement advanced $1.07 to settle at $73.30 a barrel in New York, the highest level since July
  • Brent for the same month added $1.06 to end the session at $77.25 a barrel

Oil is most likely headed above $80 a barrel, partly as higher gas prices boost demand, Vitol Chief Executive Officer Russell Hardy said in an interview from London on Thursday. That could force OPEC+ producers to add more supply into the market, he said.

Currently, technical indicators show oil’s rally may be due for a pullback in the near-term. WTI crude is flirting with the upper Bollinger band, a technical signal indicating the commodity is overbought.

(With assistance from Javier Blas, Alex Longley and Elizabeth Low.  © 2021 Bloomberg L.P.)

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