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Oil Set for Fourth Weekly Gain With High Energy Prices in Focus

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(Bloomberg) Oil headed for a fourth weekly gain supported by signs of a tighter market and a wider rally in energy prices.West Texas Intermediate, which dipped on Friday, has still climbed about 4% this week. Investors have been tracking strong rallies in other energy commodities, especially natural gas, which has surged by about 45% so far this quarter and spurred the prospect of fuel switching. The U.S. benchmark has also advanced as crude and gasoline stockpiles in the country registered further declines.

But as prices climb there are growing signs governments are growing uneasy with the knock-on effects. U.S. President Joe Biden said Thursday that his administration is looking into high gasoline prices, while China said this week that it will sell oil from its strategic reserve.

Oil is set for a fourth weekly gain, its longest winning streak since July

Crude markets are backwardated, a bullish pattern that is marked by near-dated prices that are more costly than those further out. Meanwhile products like propane that are used in heating and rally seasonally in the winter are trading at multiyear highs as natural gas prices surge. The oil market should remain tight through year-end, according to Commerzbank AG, despite planned increases by the Organization of Petroleum Exporting Countries and its allies.

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Oil has gained this week due to “tighter oil market conditions, as seen in the recent steep drop in U.S. oil inventories, but also spillover from the sharp rise in European energy prices,” said Jens Pedersen, senior analyst at Danske Bank A/S.

  • WTI for October delivery lost 0.7% to $72.14 a barrel at 8:32 a.m. in New York.
  • Brent for November settlement shed 0.3% to $75.42

With the focus on high energy prices across Europe, the International Energy Agency’s Executive Director Fatih Birol said gas prices could remain high for weeks to come on strong demand. He also said he would be surprised to see oil above $100 a barrel, despite a strong rebound in demand this year.

Related coverage:
  • The energy crunch in Europe is sparking panic among Asian fuel buyers, causing importers to pay a hefty price for supplies.
  • House Democrats are investigating the role major oil companies and their trade groups may have played in misleading the public on the role of fossil fuels in causing global warming.
  • China plans to expand air-pollution curbs already in place in Beijing and Hebei to more cities across major coal, steel and oil hubs ahead of hosting the Winter Olympics next year.

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