Image credits: Robert Laursoo
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News Article

Oil Prices Continue to Increase

By Antonio Trujillo | Thu, 10/21/2021 - 11:58

As winter makes its way in the northern hemisphere and the global energy crisis ensues, oil prices have continued to rake in increased revenue for the 8th consecutive week, following a positive opening on Monday.

Very early on Monday, West Texas Intermediate’s (WTI) November contract in the US was up 1.03 percent, to US$83.13, while North Sea Brent went up to US$85.38, a 0.6 percent increase for December deliveries, according to data from Bloomberg. WTI hit its highest and strongest point in seven years, while on Friday, Brent crossed the US$85 per barrel line.

In the midst of a global energy crisis, oil has registered gains in barrels over US$83 each, after adding over 3.7 percent last week, which signals the longest weekly profit strike since 2015. Natural gas scarcity has created an additional demand in petroleum-derived products, like fuel oil and diesel in the energy generation sector, which coincides with the main industries that have recovered the fastest after the pandemic.

“Demand is outpacing supply heading into the winter months, and this should safeguard upward pressure on oil prices,” Stephen Brennock, analyst for broker PVM Oil Associates, told Bloomberg. Most importantly, the energy crisis caused affectations to crude processing last month, and refining rates have fallen to their lowest since May 2020.

Moreover, last week, the International Energy Agency (IEA) said that OPEC+ countries could increase production by 1.3 million barrels per day should US sanctions lift; analysts have pointed out that some OPEC+ members aren’t expected to meet current their output targets, and that the “incremental, monthly supplies'' of member countries aren’t enough, exacerbating the supply deficit. “If these negative trends continue, it implies that industrial demand for energy may be weaker than expected in the future,” said Bart Meled, TD Securities’ Head of Commodity Strategy. The group has cut production 15 percent deeper than planned in September; in August, this number was 16 percent, and in July, only 9 percent.

In order to cope with the situation, some oil producing countries have announced a myriad of measures they will take. Iran, for instance, has said that talks for nuclear deals could still last longer, for several additional rounds. Others have taken hits due to the crisis, like China, that has seen factories slowed down or even closed due to energy shortages starting in September, causing a debilitated economy in the closing months of 2021.

The data used in this article was sourced from:  
Yahoo! Finance
Photo by:   Robert Laursoo, Unsplash
Antonio Trujillo Antonio Trujillo Junior Journalist & Industry Analyst