Oil Soars Above $80

Oil Soars Above $80
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.

(Bloomberg) -- 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 extended a recent run of gains to hit the highest since October 2018, while 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 that 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 on 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. While OPEC+ is now easing its cuts, some traders and analysts are doubting just how quickly it will return shuttered barrels, with Goldman Sachs Group Inc. saying prices could hit $90 this year as stock drawdowns deepen. 

“Oil markets are accelerating as a persistent supply deficit is shrinking the inventory cover to the lowest level in decades,” said Barclays analyst Amarpreet Singh. 


  • Brent for November settlement advanced 0.9% to $80.26 a barrel at 9:05 a.m. in London.
  • WTI for November delivery gained 1.1% to $76.29 a barrel

Much of the outlook for the rest of the year is likely to hinge on just how cold the northern-hemisphere winter gets. Analysts and consultants have published a range of estimates for how much demand could be boosted by soaring gas costs and frigid temperatures, swinging from a few hundred thousand barrels a day to 2 million. 

Oil has also managed to recover despite jet fuel -- a key component of demand -- remaining hobbled by the pandemic. Yet other pockets of consumption have rebounded strongly, including fuels used to make plastics and those used in manufacturing processes, such as diesel. Global oil consumption is expected to return to pre-pandemic levels in the third quarter of 2022, President of BP Singapore Eugene Leong said in an interview.

With prices now at $80 a barrel, forward values are also surging. WTI for 2022 is trading close to $71 a barrel. Gains in forward prices in theory make it more attractive for producers in the U.S. to lock in production, but growth has been limited this year as investors push for returns to shareholders instead of higher output. 

--With assistance from Serene Cheong and Jack Wittels.

© 2021 Bloomberg L.P.

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