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Oil prices rose again on Monday, prolonging multi week gains, as an energy crisis gripping major countries shows no signs of abating, despite an uptick in economic activity and tight supply from major producers. After gaining nearly 4% last week, Brent crude was up $1.20 cents, or 1.5 percent, at $83.59 a barrel by 0656 GMT.
Oil in the United States was up $1.46, or 1.8 percent, to $80.81 a barrel, the highest level since late 2014. Through Friday, the price of U.S. crude had risen by 4.6 percent.
With Brent advancing for five weeks and U.S. oil for seven, prices have climbed as more vaccinated individuals are taken out of coronavirus lockdowns, promoting a recovery of economic activity. As economies recover, coal and gas prices have
risen, making oil more appealing as a fuel for power generation and driving crude markets higher.
“There’s no direct news flow, the moves are momentum driven where intermarket factors implying higher expected inflation are supporting the bullish move in oil prices,” said Kelvin Wong, commodities analyst at CMC Markets in Singapore.
Some states in India are facing power outages due to coal shortages, while the Chinese government has urged miners to increase coal production as power prices rise. The global energy crisis is raising the risk of a harsh northern winter as
heating demand rises.
The Commodity Futures Trading Commission reported on Friday that fund managers increased their net long positions in US crude futures and options in the week ending October 5. According to the commission, the speculative group grew its total futures and options position in New York and London by 8,902 contracts to 325,578 during the time.
Drillers in the United States took advantage of the price hike last week, drilling five new oil wells, marking the fifth consecutive weekly increase in oil and gas rigs. Last week, the Organization of Petroleum Exporting Countries (OPEC) and its partners, known as OPEC+, agreed to continue a steady and gradual increase in output. Later this week, OPEC will release its monthly oil report.
Story by : Norvisi Mawunyegah