- WTI reaches its highest level since October 2014, Brent reaches its highest level in 3 years
- Speculators increase their net long positions in US crude -CFTC
- U.S. oil and gas rig numbers drop for first week in 7 – Baker Hughes
TOKYO, Oct. 25 (Reuters) – Oil prices soared on Monday, extending pre-weekend gains to multi-year highs as global supply remained tight amid demand for solid fuels in the United States. United and elsewhere in the world as economies recover from the coronavirus pandemic – induced slumps.
US West Texas Intermediate (WTI) crude futures rose 87 cents, or 1.0%, to $ 84.63 a barrel at 0342 GMT, after gaining 1.5% on Friday. It hit its highest since October 2014 – $ 84.76 – earlier in the session.
Brent crude futures were up 71 cents, or 0.8%, to $ 86.24 a barrel, following last Friday’s 1.1% gain. The contract hit its highest level since October 2018 at $ 86.43.
“With a firm fuel demand in the United States against a backdrop of tight supply, the tone of the oil market has remained quite strong, prompting some speculators to unwind short positions,” said Tetsu Emori, CEO of Emori Fund Management Inc.
After more than a year of declining fuel demand, gasoline and distillate consumption is back at five-year averages in the United States, the world’s largest fuel consumer. Read more
Meanwhile, U.S. energy companies shut down oil and gas platforms for the first time in seven weeks last week even as oil prices rose, energy services firm Baker Hughes Co (BKR. N) in his closely watched report. Read more
Fund managers increased their net long positions in US crude futures and options in the week to October 19, the US Commodity Futures Commission (CFTC) said on Friday, highlighting strong market sentiment.
Oil prices have also been supported by concerns over coal and gas shortages in China, India and Europe, which have prompted a switch to diesel and fuel oil for electricity.
But analysts warn that there could be corrections in the coming weeks, as the sharp rise in crude prices has led to a growing sense of caution.
âWTI’s winning percentage so far this year has reached the levels of 2007 and 2009, when we have also seen a strong recovery, suggesting that is a bit of a stretch,â said Emori.
WTI futures contracts are currently heavily discounted, which means future date contracts are priced lower than the current contract. Normally, the following months are traded at a higher price, reflecting the costs of storing the oil.
“Bullish sentiment continues to support oil prices as global supply remains tight, but immediate gains for the contract closest to WTI may be limited given the growing pullback,” said Toshitaka Tazawa, analyst at Fujitomi Securities Co Ltd.
Reporting by Yuka Obayashi; Editing by Kenneth Maxwell and Michael Perry
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