Crude jumps on global energy crunch; U.S. oil at a 7-year high

REUTERS: Oil prices surged again yesterday, extending the multiweek gains as an energy crisis gripping major economies shows no sign of easing amid supply restraint from the major producers.

Brent crude was up US $ 1.20 cents or 1.5 percent, at US $ 83.59 a barrel by 0414 GMT, after gaining nearly 4 percent last week.

The U.S. oil was up US $ 1.51, or 1.9 percent, at US $ 80.86 a barrel, the highest since the late 2014. The U.S. crude rose 4.6 percent through Friday. The prices have risen as more vaccinated populations are brought out of lockdowns, supporting a revival of economic activity, with Brent advancing for five weeks and the U.S. crude 
for seven.

The coal and gas prices have also been surging as economies recover, making oil more attractive as a fuel for power generation, pushing crude markets higher. “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,” said Kelvin Wong, commodities analyst at the CMC Markets in Singapore. In India, some states are experiencing blackouts and further electricity cuts because of coal shortages, while in China, the government has ordered miners to ramp up coal production as power prices surge. The energy crisis sweeping the world is raising the prospect of a difficult winter to come as heating demand rises. Fund managers increased their net long positions in the U.S. crude futures and options in the week to October 5, the Commodity Futures Trading Commission said on Friday. The speculator group increased combined futures and options position in New York and London by 8,902 contracts to 325,578 during the period, the Commission said. Drillers in the United States are taking advantage of the increase in prices and have added five new oil wells last week, the fifth straight weekly increase in oil and gas rigs.