Oil hits multi-year high above $ 86, then pulls back

A worker takes a sample of crude oil from an oil well operated by the Venezuelan state oil company PDVSA in Morichal, Venezuela, July 28, 2011. REUTERS / Carlos Garcia Rawlins / File Photo

  • American crude, lower fuel stocks, tightening supply -EIA
  • Coal and natural gas prices fall, weighing on oil analyst
  • Brent could hit $ 90 in December -UBS

LONDON, Oct.21 (Reuters) – Oil hit its three-year high on Thursday, above $ 86 a barrel, due to tight supply and a global energy crisis, though prices eased as some investors took profits on signs that the recovery looks overdone.

Helping to generate the latest gain, a US Energy Information Administration supply report showed on Wednesday that crude and fuel inventories tightened, with crude inventories at the Cushing storage facility falling to their lowest. level in three years.

Brent crude hit $ 86.10, the highest since October 2018, but as of 10:22 a.m. GMT, it had fallen 89 cents, or 1%, to $ 84.93. U.S. West Texas Intermediate crude fell 64 cents, or 0.8%, to $ 82.78.

“We saw some correction, but the general feeling remained strong as there was no significant increase in production from the United States or OPEC,” said Satoru Yoshida, commodities analyst. at Rakuten Securities.

The price of Brent has risen by more than 60% this year, supported by a slow surge in supply by the Organization of the Petroleum Exporting Countries and its allies, and a global coal and gas crisis that has led to a switch to petroleum for the production of electricity.

Oil has also come under pressure from falling prices for coal and natural gas. In China, coal fell 11% on Thursday, extending losses this week since Beijing signaled it could step in to cool the market. Read more

“With falling coal and gas prices and with the relative strength index technical indicators still in overbought territory, the chances of a sharp but significant drop in oil prices are increasing,” said Jeffrey Halley, analyst at the brokerage firm OANDA.

Despite this, some analysts are calling for an even larger recovery in oil, as OPEC + is expected to stick to its plan to gradually ramp up production as demand is expected to reach pre-pandemic levels.

Giovanni Staunovo of Swiss bank UBS said in a report that he expected Brent to trade at $ 90 in December and March.

Additional reporting by Yuka Obayashi; edited by Jason Neely

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