US Oil Prices Skyrocket
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US Oil Prices Skyrocket

Photo by:   Gene Gallin, Unsplash
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Antonio Trujillo By Antonio Trujillo | Junior Journalist & Industry Analyst - Tue, 10/12/2021 - 11:59

Oil prices are rising fast, and for the first time in seven years, US oil is selling for more than US$80 a barrel.

On Monday US benchmark oil is set “on fast track,” hitting the US$80 per barrel mark, as a result of the unfolding global-scale energy crisis, caused by the severe affectations to oil production in the Gulf, and skyrocketing demand for crude.

Oil contracts are expected to settle at multiyear highs.  Brent crude, for instance, is on track to reach its highest level since Oct. 2018, and US benchmark West Texas Intermediate (WTI) will reach its highest settlement since Oct. 2014.

“From a fundamental standpoint, the story remains virtually unchanged. Supply is tight as the world holds steady against COVID-19 and economic activity continues to recover, sending fuel prices across the board higher throughout the year and surging as of late with the approaching northern winter,” said commodity analyst for Schneider Electric Brian Steinkamp.

“Faces with these prices,” he continued, “attention is turning more and more to alternatives such as oil and associated products: Saudi Aramco commented last week that crude demand has increased by as much as 500,000 barrels a day as a direct result of elevated natural gas prices.”

WTI crude went for US$81.12 a barrel, a 2.3 percent increase. Experts at FactSet pointed out that WTI had not finished above US$80 a barrel since Oct. 31, 2014. Brent crude, “the global benchmark,” on the other hand, went for US$83.95 a barrel, a 1.9 percent increase, or up US$1.56.

“Power concerns continue to offer support to the oil market. This is a trend we are likely to see continue through the winter,” said ING head of commodities Warren Patterson. In Europe, the current energy crisis is also taking its toll, and Russian President Vladimir Putin has commented that his country will honor its export commitments, but that “the fuel remains historically elevated.” Other regions hit by these affectations include the Middle East, Pakistan, Kuwait, and South Korea.

In the US, for instance, natural gas rose 33 percent in September, and these elevated prices are adding to the demand for crude. “It seems that competing fuels can still have an impact on the oil price at the margin, even though only a few utilities can source and use additional fuel oil on the spot markets to avoid LNG prices,” according to SocGen analysts.

Photo by:   Gene Gallin, Unsplash

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