Higher crude oil; Supply tightens as demand increases
By Peter Nurse
Investing.com – Oil prices advanced on Tuesday, climbing for the sixth consecutive session, boosted by tight supply prospects as demand resumes with the lifting of Covid-19 restrictions.
As of 9.45 am ET (1345 GMT), futures were up 1.1% to $ 76.28 a barrel, hitting their highest level since July, after jumping 2% the day before. Futures rose 1% to $ 79.50 a barrel, hitting their highest level since October 2018, after climbing 1.8% on Monday.
U.S. RBOB gasoline futures rose 1.1% to $ 2.1925 per gallon.
Demand for crude has picked up as a number of countries begin to ease their mobility restrictions. Japan has announced it will lift a state of emergency in a number of prefectures in response to a sharp drop in new Covid-19 cases, while Australian authorities have announced plans to gradually reopen Sydney, the city. the most populous in the country.
Additionally, German airline Lufthansa said demand for transatlantic flights had more than tripled in the week since the United States eased its conditions on arrivals from Europe.
However, most recent gains have been further boosted by the tightening global supply. The important US region of the Gulf of Mexico was severely affected by Hurricanes Ida and Nicholas in August and September, damaging platforms, pipelines and processing centers, and shutting down most offshore production for weeks.
At the same time, the Organization of the Petroleum Exporting Countries and their allies have been very cautious about the extent to which they are increasing production to meet the recovery in demand that severely hampered production during the pandemic.
“While the size of the deficit for the remainder of the year means the market can absorb more than the monthly increase of 400,000 barrels / d currently forecast, the group will want to ensure that the market continues to build up stocks. . This is all the more the case that in 2022, the oil market should be much more balanced, ”said ING analysts in a note.
This suggests that these high prices are likely to persist for some time.
Barclays (LON 🙂 raised its 2022 Brent and WTI price forecasts to $ 77 and $ 74 per barrel, respectively, while Morgan stanley (NYSE 🙂 sees Brent trading at $ 77.5 per barrel in the third quarter in a base scenario and $ 85 in a bullish scenario.
Last week Goldman Sachs (NYSE 🙂 said oil could climb to $ 90 a barrel, $ 10 more than the bank’s current forecast, if the approaching winter in the Northern Hemisphere turns out to be more. cold than normal.
Investors are now awaiting data on US crude oil supply from, due later today.