Oil prices have increased again today (Oct 11), extending multiweek gains as the energy crisis taking hold of many major economies shows no sign of stopping, causing supply restraints for vital producers.
Reuters state that “Brent crude was up $1.20 cents, or 1.5%, at $83.59 a barrel by 0656 GMT, after gaining nearly 4% last week. U.S. oil was up $1.46, or 1.8%, at $80.81 a barrel, the highest since late 2014. U.S. crude rose 4.6% through Friday.”
Since vaccinated populations have been brought out of lockdown, economic activity has been on the rise which has caused Brent to advance for 5 weeks and U.S. crude for 7 weeks. There has also been a surge in coal and gas prices, making oil more appealing for power generation, resulting in the rise of crude markets.
“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,” stated Kelvin Wong, commodities analyst at CMC Markets in Singapore.
According to Reuters, there are some states in India that “are experiencing electricity blackouts because of coal shortages, while in China the government has ordered miners to ramp up coal production as power prices surge.” The energy crisis taking hold around the world is sure to result in a difficult winter for many as heating prices increase.
The Commodity Futures Trading Commission said on Friday that Fund managers have increased their net long positions in U.S. crude futures and options in the week leading to Oct. 5 – from 8,902 contracts to 325,578, during this period in New York and London.
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