Home Energy services Oil prices soar as COVID recovery, power producers fuel demand

Oil prices soar as COVID recovery, power producers fuel demand

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General view of Saudi Aramco’s Ras Tanura refinery and oil terminal in Saudi Arabia, May 21, 2018. REUTERS / Ahmed Jadallah

  • Brent highest since October 2018, WTI highest since October 2014
  • U.S. drillers add oil and gas rigs for sixth consecutive week
  • China cuts oil import quotas for independent refineries

SINGAPORE, Oct. 18 (Reuters) – Oil prices hit their highest level in years on Monday as demand recovers from the COVID-19 pandemic, spurred by a greater habit of power producers turning away from the expensive gas and coal for fuel oil and diesel.

Brent crude oil futures rose 90 cents, or 1.1%, to $ 85.76 a barrel at 4:45 a.m. GMT, after hitting a high of $ 86.04, the highest price since October 2018.

US West Texas Intermediate (WTI) crude futures soared $ 1.23, or 1.5%, to $ 83.51 a barrel, after hitting a session high of $ 83.73, the highest since October 2014.

Both contracts rose at least 3% last week.

“The easing of restrictions around the world will likely help fuel a recovery,” analysts from ANZ Bank said in a note on Monday, adding that switching from gas to oil for power generation alone could. increase demand up to 450,000 barrels per year. day in the fourth quarter.

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

“The oil market deficit looks set to worsen as the energy crisis deepens as the weather in the north has already started to cool,” he said.

“While shortages of coal, electricity and natural gas drive additional demand for crude, it appears that this will not be accompanied by significantly more barrels from OPEC + or the United States,” he said. he adds.

Japanese Prime Minister Fumio Kishida said on Monday that the country would urge oil producers to increase production and take measures to cushion the blow to industries hit by the recent surge in energy costs.

Still, supply could increase from the United States, where energy companies added oil and gas rigs last week for a sixth straight week, as soaring crude prices prompted drillers to return to the market. well platform.

The number of U.S. oil and gas rigs, an early indicator of future production, increased from 10 to 543 in the week to Oct. 15, its highest level since April 2020, the company said last week. of energy services Baker Hughes Co. Read more

The Chinese economy, meanwhile, probably grew at the slowest pace in a year in the third quarter, affected by power shortages, bottlenecks and sporadic outbreaks of COVID-19. Read more

The daily crude processing rate fell to the lowest since May 2020 in September among the world’s second largest oil consumer, as raw material shortages and environmental inspection crippled refinery operations, while refiners Independents were facing tightening import quotas for crude oil. Read more

Reporting by Jessica Jaganathan; Editing by Kenneth Maxwell and Stephen Coates

Our standards: Thomson Reuters Trust Principles.


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