On Friday, oil surging nearly 4% in the week as the global energy crisis pushed US prices to their highest level in nearly seven years as big power users struggle to keep up with demand.
Even as demand picks up around the world as economic activity eases from the pandemic, the Organization of the Petroleum Exporting Countries and Allied Producers (OPEC+) said this week that they are looking to gradually bring back production.
Meanwhile, the US government said they did not announce immediate action to reduce prices, we are monitoring the energy market continuously.
Brent crude futures were up 44 cents, or 0.5%, at $82.39 a barrel. Earlier in the week, the global benchmark had hit a three-year high of $83.47. US gasoline futures also closed at their highest level since October 2014 on Friday.
As energy markets have hardened due to improved fuel demand, many fear the harsh cold could further affect natural gas supplies. China ordered miners in Inner Mongolia to ramp up coal production to ease their energy shortage.
Bank of America’s Christopher Kuplent said, “As other energy prices like natural gas and coal keep pushing higher, upside risks to the oil market have started to build”. Prices have been driven up by rising European gas prices, which has encouraged the switch to oil for electricity generation.
Benchmark European gas prices at the Dutch TTF hub stood at about $200 a barrel of crude on Friday, based on the relative value of the same amount of energy from each source, according to Reuters calculations based on Eikon data.
An ANZ commodities analyst stated that “An acceleration in gas-to-oil switching could boost crude oil demand used to generate power this coming northern hemisphere winte”.