US crude futures on Friday topped US$80 a barrel for the first time since November 2014 as a global energy crisis boosts demand at a time when OPEC+ producers are keeping supplies tight.
West Texas Intermediate (WTI) for November delivery popped above the key psychological level before pulling back and closing up 1.34 percent at US$79.35 a barrel, gaining 4.57 percent from a week earlier.
Brent crude for December delivery increased 0.54 percent a barrel to US$82.39, up 3.92 percent from a week earlier.
This week brought many indications that supplies would remain constrained: Saudi Aramco said a global natural gas shortage was already boosting oil demand for power generation and heating, and the US Energy Department said that it had no plans “at this time” to tap the nation’s oil reserves.
A weakening of the US dollar on the back of worse-than-expected US labor market data on Friday also boosted the appeal of commodities priced in the currency.
The US benchmark posted a seventh straight weekly gain, the longest stretch of advances since December last year.
The economic recovery from the COVID-19 pandemic, along with supply disruptions in the Gulf of Mexico, had already tightened the market before rising natural gas prices spurred additional demand for oil products such as diesel and fuel oil.
The decision by OPEC producers and their allies to only modestly increase output next month threatens to further constrain supplies.
Meanwhile, various underlying oil market gauges are also showing signs of strength. WTI’s nearest contract traded at the biggest premium to second-month futures since August in a sign of rising demand and tight supplies.
The so-called prompt spread has increased as more of the world attempts to substitute fuel oil for natural gas as quickly as possible.
“They don’t need to buy it a month from now, they needed it yesterday,” said Bob Yawger, director of the futures division at Mizuho Securities USA. “It’s a panic buyer’s situation.”
Meanwhile, China is still facing power outages, and Beijing has ordered state-owned firms to secure winter energy supplies at all costs. Chinese fuel oil futures jumped almost 10 percent on Friday.
Additional reporting by staff writer
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