Another rise in oil prices, US crude all-time high in 7-year
Monday, 25th October, witnessed a rise in oil prices, expanding pre-weekend gains, and U.S. oil reached a 7-year high. Amid this, global supply remained tight amid strong demand as countries recovered from the COVID-19 epidemic.
Brent crude futures rose 26 cents, or 0.3%, to $85.79 a barrel at 0048 GMT, following a 1.1 percent gain last Friday. Last Thursday, the contract touched a three-year high of $86.10.
Predictions by WTI
After increasing 1.5 percent on Friday, US West Texas Intermediate (WTI) oil futures increased 48 cents, or 0.6%, to $84.24 a barrel. Earlier in the session, it hit $84.28, its highest level since October 2014.
“Bullish mood continues to underpin oil prices as global supply is tight at a time when demand is rebounding from the epidemic,” said Fujitomi Securities Co Ltd analyst Toshitaka Tazawa. He also added, “However, given steepening backwardation, immediate gains for the WTI’s nearest-term contract may be restricted.”
The price of WTI futures contracts is currently in sharp backwardation, which means that later-dated contracts are trading at a lower price than the current contract. The costs of storing oil are usually higher in the later months of the year.
Worries due to rising oil prices
Worries about coal and gas shortages in China, India, and Europe have boosted oil costs, causing more people to switch to diesel and fuel oil for power. Money managers increased their net long U.S. crude futures and options holdings in the week ending October 19, reflecting positive market sentiment, according to the U.S. Commodity Futures Trading Commission (CFTC).
Saudi Arabia’s crown prince stated over the weekend that the world’s top oil exporter plans to achieve ‘net zero’ greenhouse gas emissions by 2060, ten years later than the United States.
Meanwhile, despite rising oil prices, U.S. energy companies trimmed oil and natural gas rigs for the first time in seven weeks last week, according to Baker Hughes Co, an energy services firm.