Oil prices climbed to new multi-year highs Tuesday thanks to a shortage of oil worldwide and strong demand from the United States, which is the largest consumer in the world.
Brent crude oil was at $86 per barrel as of 1309 GMT. U.S. oil rose 0.7% to $83.96, or 20 cents per barrel.
Goldman Sachs predicted that Brent would surpass its year-end forecast at $90 per barrel. Larry Fink, chief executive officer of BlackRock, stated that there was a high likelihood of oil reaching $100.
Commerzbank analyst Carsten Frtsch stated that “the fact that the market remains tight should push prices up.”
Although China’s coal and power markets are cooling somewhat, global energy prices are still high as the temperatures drop with the onset of winter.
Edward Moya, OANDA senior market analyst, stated in a note that energy traders are anticipating a colder November. This will make it difficult for them to predict a tight market that will be able to meet unprecedented demand this winter.
“This tight oil market should not be underestimated and it should lead to a headline away from $90 oil.”
After more than a decade of low demand, gasoline and distillate consumption in the United States are back to their five-year averages. The market will closely monitor U.S. inventory levels.
Avtar Sandu is a senior manager for commodities at Phillip Futures Singapore. He said that traders are also waiting to see the outcome of international negotiations on Iran’s 2015 nuclear deal. This was after the United States stated that efforts were in a “crucial phase” which could allow Iran crude oil exports to resume.
