Oil prices reached a three-year high of $85 per barrel on Friday. This was boosted by the forecast of a shortage in the coming months due to the ease of travel restrictions related to coronavirus.
Brent crude oil futures closed up 86cs or 1% at $84.86 per barrel. Prices for the front month rose 3% weekly, their sixth consecutive weekly gain, after reaching $85.10 in October 2018.
U.S. West Texas Intermediate crude futures increased 97 cents or 1.2% to $82.28 per barrel. In its eighth consecutive week of rises, the crude oil futures rose 3.5%.
With the COVID-19 pandemic over, demand has increased. This is aided by an increase in power generation which has been shifting away from costly gas and coal to fuel oil.
The White House announced that it would lift COVID-19 travel restrictions on fully vaccinated foreign citizens effective Nov. 8. This should increase jet fuel demand.
Global supply will remain tight due to a sharp decline in oil stocks in the United States and other member countries of the Organisation of Economic Co-operation and Development.
According to Edward Moya (OANDA senior market analyst), “It will take a trio of events to derail the oil price rally: OPEC+ unexpectedly increases output, warm weather hits Northern Hemisphere and if President Obama taps the strategic petroleum resources.”
U.S. energy companies added six oil and natural gas drilling rigs this week, as rising crude oil prices forced drillers to return the wellpad.
The U.S. oil-and-gas rig count, a key indicator of future output, increased 10 to 543 during the week to October 15, which was its highest level since April 2020.
According to the International Energy Agency, Thursday’s energy crisis is expected to increase oil demand by 500,000 barrels per hour (bpd).
This would create a supply gap of approximately 700,000 bpd by the end of the year. Until the Organization of the Petroleum Countries (OPEC+) adds more supply as planned in January,
