Oil hit a multi-year high above $83 per barrel on Wednesday, bolstered by OPEC+’s refusal to ramp up production more quickly against a backdrop of global worry about oil supply.
The market eventually reversed those gains due to an American Petroleum Institute (API) data showing increased crude stocks in the United States and, according to analysts, technical signs indicating that oil had surged too quickly.
On Monday, OPEC+ decided to stick to its plan of gradually increasing output rather than raising it further, as the United States and other consumer nations have urged. Brent crude reached an all-time high of $83.47 a barrel. This was the most since October 2018, before falling 4 cents to $82.52 at 0813 GMT. Crude oil in the United States rose to $79.78, its highest level since November 2014, before plunging 10 cents to $78.83. An energy crisis is brewing in the northern hemisphere, setting the groundwork for substantially higher oil prices, said Stephen Brennock of oil dealer PVM.
The Price of Brent Crude
The price of Brent crude has risen by more than 50% this year, adding to inflationary pressures that may hinder recovery from the COVID-19 pandemic. Natural gas prices in Europe have reached an all-time high, and coal prices from key exporters have also reached all-time highs. According to Jeffrey Halley, an analyst at brokerage OANDA, both crude contracts appeared overbought based on the relative strength index, a widely followed technical indicator. That could indicate some daily pullbacks this week, but it doesn’t affect the underlying bullish case for oil,” he said.
The API numbers suggesting signs of weakening fuel demand put some downward pressure on the market. According to the industry organization, U.S. crude stocks increased by 951,000 barrels in the week ending Oct. 1, according to the website Oilprice.com, while gasoline and distillate fuel inventories also increased. The Energy Information Administration’s official inventory statistics, due at 1430 GMT, will focus on later.
Gold Down as Dollar Strengthens
Gold fell in Asia on Wednesday morning as the dollar surged and U.S. Treasury yields increased. The latest U.S. jobs report, anticipated later this week, will also be scrutinized.
By 12:38 a.m. ET, gold futures were up 0.32 percent to $1,755.30. (4:38 AM GMT). The dollar often trades inversely to gold. It rose higher on Wednesday and remained near its 2021 highs. Meanwhile, the benchmark 10-year Treasury yield ticked higher.
The jobs report, which includes non-farm payrolls, is due on Friday. It will be vital in deciding the timing for the U.S. Federal Reserve to begin asset cutting.