On Tuesday, a shortage of global energy supplies spilled over into the oil market, pushing oil prices to their highest levels in three years.
Brent Crude, a global benchmark, hit $ 80 a barrel in the early stages of trading, rising 1% to $ 79.54 a barrel, the highest since October 2018. US crude oil futures rose 1.2% to $ 76.36. Barrel is also expected to close at its highest price in three years.
Both major benchmarks have skyrocketed by about 11% in the past month as part of a broad recovery in the energy market. The depletion of natural gas inventories and the resurgence of economic activity have created fierce competition for natural gas to supply electricity markets in Europe and Asia.
Norbert Lucker, head of economics for the Swiss private bank Julius Baer, said:..
“This is now spilling over to the oil market because of the expectation that this energy shortage will use oil for spillover demand.” At some power plants, when gas prices soared. You can use oil to generate electricity.
Global natural gas production deficits, depletion of inventories, and the promotion of emission reductions from the Chinese government (switching coal to gas) have all contributed to pushing up gas prices. It happens when the Northern Hemisphere heads for the winter room heating moon. Due to supply shortages, some UK retail energy providers are already out of business.
Record high gasoline prices are deteriorating the already tight supply-demand balance in the oil market. According to Helge André Martinsen, senior oil market analyst at DNB Markets, the cumulative loss of production in the Gulf of Mexico affected by hurricane Ida last month exceeded 30 million barrels, reaching 55 million barrels before all production recovered. It may exceed. ..
These dynamics have led analysts to raise their forecasts for oil prices. Goldman Sachs raised its Brent price forecast at the end of 2021 from $ 10 to $ 90 per barrel on Monday, and energy research director Damian Coolbarin said with Hurricane Aida, “Global gas shortages oil-fired power generation. I mentioned both the possibilities of “increasing”.
US natural gas futures rose 6.7% to $ 6.11 per million British thermal units, putting the deal on track for the highest settlement since February 2014.
In Europe, benchmark gas futures rose 9.4% to € 83.70 per megawatt hour. That’s just under $ 98 per megawatt hour, and we’re on track with the highest closing prices dating back to 2013.
Europe’s natural gas prices have more than quadrupled this year, and the rise is unlikely to subside soon, according to George Slavov, head of basic research at securities firm Marex Spectron. Weather forecasts show Europe’s chilly November and December, which will boost gas demand, Slavov added.
Permit prices for coal and carbon have also risen, putting a strain on European energy-intensive companies and industries. Coal futures supplied to the Netherlands rose 2.6% to $ 207 per ton. The European Union carbon market emission allowance contract added 0.9%, trading 1 metric ton of carbon dioxide for € 64.92. As a result, the permits required by carbon emitters such as power plants and steel mills have begun to take the path to achieving the highest closure ever.
The producer of OPEC is a wildcard of oil price composition. They continue to restrain barrels from the market in order to maintain prices high enough to make a profit. However, they have a history of releasing more supply to the market to avoid high prices squeezing demand.
OPEC, which will release long-term energy forecasts on Tuesday, is in the process of easing production cuts that supported oil prices during a pandemic. We will meet next week to discuss the possibility of further production increases.
“OPEC is still increasing production, [the market is] It’s bubbling, but I’m sure it will be much cheaper by next year, “said Julius Baer’s Lucker.
— Joe Wallace contributed to this article.
Write to David Hodari (David.Hodari@dowjones.com)
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Natural gas crunch spills into crude oil market, oil hits record high for the first time in three years
Source link Natural gas crunch spills into crude oil market, oil hits record high for the first time in three years