Oil prices rose further on Thursday, propelled by increasing fuel demand and a larger-than-expected drop in U.S. crude stocks. At the same time, production in the Gulf of Mexico continues impeded by two storms.
At 0856 GMT, Brent crude was up 9 cents, or 0.1 percent, to $76.28 per barrel. West Texas Intermediate crude in the United States was up 4 cents, or 0.1 percent, to $72.27 per barrel.
Both contracts surged 2.5 percent on Wednesday after data from the U.S. Energy Information Administration showed U.S. crude stockpiles in the week to Sept. 17 decreased by 3.5 million barrels to 414 million. Gulf of Mexico production steadily returned, and natural gas prices remain sky-high. The structural picture for oil remains optimistic, even as OPEC+ struggles to fulfill its existing production constraints.
Several OPEC+ nations, notably Nigeria, Angola, and Kazakhstan, have struggled to increase output in recent months due to years of underinvestment or maintenance work postponed due to the pandemic.
The dollar often has an inverse link with commodity prices like oil. It fell somewhat from a one-month high as the Federal Reserve of the United States set the framework for rate hikes next year.
The Oil Market
According to Barbara Lambrecht, an analyst at Commerzbank, the Fed provided warning of its tapering intention. Thereby it reinforced its economic optimism, which eventually speaks to healthy U.S. oil consumption.
The oil market was also helped by a resurgence of enthusiasm for risk assets, as concerns about a dollar bond interest payment due Thursday from property developer China Evergrande subsided.
According to EIA data, East Coast refinery utilization rates in the United States rose to 93 percent, the highest since May 2019, indicating strong fuel demand as travel bans ease. According to ANZ Research, rising natural gas costs are also helping to boost the market mood. If winter turns out to be colder this year,” ANZ analysts stated in a note.
Gas prices have risen sharply in recent months due to a combination of factors. These include increased demand, particularly from Asia, as it recovers from the pandemic, low gas inventories.
The European Energy Crisis
It was, as it were, a matter of time, indeed. In a globalized world, vitality crunches can barely stay territorially contained for exceptionally long. Such is the case particularly in a setting of harmed supply chains and a surge to cut venture in fossil fuels. The vitality crunch that started in Europe before this month may presently be on its way to America. For now, all is well with one of the world’s best gas makers. U.S. gas exporters have delighted in a substantial increment in requests from Asia and Europe. The recovery in financial movement pushed requests for power higher. According to a later Money related Times report, there’s a veritable offering war for U.S. cargos of condensed, regular gas between Asian and European buyers—and the Asians are winning.
For presently, China’s most significant issue appears to be coal instead of gas. A later Bloomberg report said that China coal control plant administrators are battling to purchase sufficient coal to keep their plants running. A few are being constrained to close down their boilers since of inadequate coal supply. It, in any case, might lead to a more grounded gas request to guarantee sufficient power and warming for the winter. It will advance compound the distinction between worldwide request and supply. The European vitality crunch is spilling over into other districts. The fault amusement has started with offenders extending from a long time of underinvestment in neighborhood gas generation to a Gazprom (MCX: GAZP) plot to induce Nord Stream 2 endorsed by Germany.
