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Brent Oil Hits $85, WTI Hits $82 as Energy Crisis Stokes Demand Before Winter

These translations are done via Google Translate
(Bloomberg) Oil in London rose past $85 a barrel for the first time since 2018, the latest milestone in a global energy crunch that has seen prices soar.

Brent futures briefly passed that level, before paring gains. A shortage of gas and coal is triggering extra demand for oil products from the power market, and some banks expect the switch to boost prices further with winter approaching in the northern hemisphere. It’s starting to deplete stockpiles, with the U.S. crude storage hub of Cushing recording an unusually large drop for the time of year.

China also issued a long-awaited new batch of quotas for its refiners to buy more crude, further pushing up demand.

Global crude benchmark surges to highest since 2018

Brent is set for its sixth straight week of gains. While demand is surging with economies rebounding from the pandemic, supply remains curtailed. Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman reiterated on Thursday the need for OPEC and its allies to take a gradual, phased approach to restoring output.

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Prices will likely be “supported with demand rising by switching in the power sector and OPEC+ sticking to a prudent approach in bringing back supply,” said Giovanni Staunovo, commodity analyst at UBS Group AG. Commercial oil inventories are at their lowest since 2015 in OECD countries, and are likely to fall further, he said.

  • Brent for December settlement added 0.9% to $84.74 a barrel at 11:51 a.m. in London, after rising as much as 1.3%
  • West Texas Intermediate for November rose 0.9% to $82

The price surge, including for other energy commodities and metals, is adding to concerns of policymakers about consistently high inflation. Copper on Friday jumped above $10,000 a ton as inventories fell to the lowest since 1974, while zinc hit a 14-year high. Benchmark natural gas in Europe fell but is heading for a weekly gain.

It’s also starting to put pressure on big consumers. The U.S. is talking to OPEC+ members over oil supply and is “expressing in private our concerns,” State Department Spokesman Ned Price said Thursday.

Other market news:
  • China’s state-owned refiners will try to import more diesel as domestic prices skyrocket due to an energy crisis that’s sending shockwaves through global coal and natural gas markets.
  • The energy crisis is hitting inventories of key oil products such as diesel and gasoline, with global stockpiles dropping to the lowest since 2014, according to FGE.
  • Londoners and Parisians are in for a bout of very mild weather that will put a brake on any immediate increases in energy demand across Europe.


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