finance

Oil prices on the march again in tight market; U.S. crude at 7-yr high



© Reuters. FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, U.S., March 24, 2016. REUTERS/Nick Oxford

By Yuka Obayashi

TOKYO (Reuters) – Oil prices rose on Monday, extending pre-weekend gains, with hitting a seven-year high as global supply remained tight amid strong demand worldwide as economies recover from coronavirus pandemic-induced slumps.

futures climbed 26 cents, or 0.3%, to $85.79 a barrel at 0048 GMT, following on from last Friday’s 1.1% gain. The contract was near a three-year high of $86.10, hit last Thursday.

U.S. West Texas Intermediate (WTI) crude futures rose 48 cents, or 0.6%, to $84.24 a barrel, after climbing 1.5% on Friday. It touched its highest since October 2014 – $84.28 – earlier in the session.

“Bullish sentiment continues to support oil prices as global supply remains tight at a time when demand is recovering from the pandemic,” said Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd.

“But immediate gains for the WTI’s nearest-term contract may be limited given steepening backwardation,” Tazawa said.

WTI futures contracts are currently in steep backwardation, meaning later-dated contracts trade are at a lower price than the current contract. Normally later months trade at a higher price, reflecting the costs of storing oil.

Oil prices have also been bolstered by worries about coal and gas shortages in China, India and Europe, which spurred fuel-switching to diesel and fuel oil for power.

Reflecting strong market sentiment, money managers raised their net long U.S. crude futures and options positions in the week to October 19, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

Over the weekend, Saudi Arabia’s crown prince said that the world’s top oil exporter aims to reach ‘net zero’ emissions of greenhouse gases, mostly produced by burning fossil fuels, by 2060 – 10 years later than the United States.

Meanwhile U.S. energy firms last week cut oil and rigs for the first time in seven weeks even as oil prices rose, energy services firm Baker Hughes Co said in its closely followed report on Friday.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.  Learn more