Oil prices edged up to their highest since 2014 on Tuesday, supported by a global supply shortage and strong demand in the United States, the world’s biggest consumer.
By Reuters – Scott Disavino
Oct 26, 2021
The rally came ahead of U.S. inventory reports from the American Petroleum Institute (API), an industry group, on Tuesday and the U.S. Energy Information Administration on Wednesday.
Brent futures rose 41 cents, or 0.5%, to settle at $86.40 a barrel, while U.S. West Texas Intermediate (WTI) crude ended 89 cents, or 1.1%, higher at $84.65.
“The energy crunch is still nowhere close to subsiding, so we expect prevailing strength in oil prices in November and December as supply lags demand and as OPEC+ stays on the sidelines,” said Louise Dickson, senior oil markets analyst at Rystad Energy.
“Crude prices continue to rise and pleas to OPEC to increase production continue to fall on deaf ears. The only thing that will get OPEC+ motivated is if private U.S. operators signal, they will increase production,” said Edward Moya, senior market analysts at OANDA, noting “a jump to $90 oil seems likely.”
With oil and gas prices at multi-year highs, U.S. shale producers are poised to deliver the strongest earnings since the onset of the coronavirus pandemic, so long as they did not lock in sales tied to much lower prices.
Gasoline and distillate consumption in the United States is back in line with five-year averages after more than a year of depressed demand, and the market will be closely watching U.S. inventory levels.
A 2.1 million-barrel cargo of Iranian condensate, the most recent delivery from a swap pact between the Middle Eastern nation and Venezuela, is expected to begin discharging on Wednesday at a PDVSA port.