Oil prices edged up to fresh multi-year highs yesterday, supported by a global supply shortage and strong demand in the US, the world’s biggest consumer.
Brent futures rose 15 cents, or 0.2 percent, to $86.14 (R1 280) a barrel, by 11.05am EDT, while US West Texas Intermediate (WTI) crude rose 42c, or 0.5 percent, to $84.18.
That puts global benchmark Brent on track for its highest close since October 2018 for a second day in a row, and WTI on track for its highest close since October 2014.
“Despite the initial soft signals in today's trading, the energy crunch is still nowhere close to subsiding, so we expect prevailing strength in oil prices in November and December as supply lags demand and as OPEC+ stays on the sidelines,” said Louise Dickson, a senior oil markets analyst at Rystad Energy.
OPEC+, comprising of the Organisation of the Petroleum Exporting Countries and allies like Russia, is raising production by 400 000 barrels per day (bpd) each month, but has pushed back against calls to boost output faster in response to the surge in prices.
Goldman Sachs said Brent was likely to push above its year-end forecast of $90 a barrel, while Larry Fink, the chief executive of the world’s largest asset manager BlackRock, said there was a high probability of oil reaching $100.
“Forecasts for a colder November have energy traders bracing for a very tight market that will be met (with) unprecedented demand this winter,” Oanda senior market analysts Edward Moya said.
“This oil market will remain tight and that should mean a headline or two away from $90 oil.”
Petrol and distillate consumption in the US is back in line with five-year averages after more than a year of depressed demand, and the market will be closely watching US inventory levels.
Analysts expect the latest weekly US oil inventory data to show a 1.7 million-barrel build in crude stocks.