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The energy crisis is intensifying, driving up costs for households and businesses, and spreading inflationary fears in the markets.
US crude hit its highest level since 2014 this morning, extending its recent rally, amid tight supply, growing demand and soaring gas prices.
A barrel of U.S. crude hit $ 79.40, a new seven-year high, while Brent crude hit a three-year high of $ 83 a barrel.
The recent surge in the price of oil is making investors nervous, especially after the Opec + group resists pressure to increase production.
Naeem Aslam of Think about the markets Explain :
Oil prices in the United States are at their highest level since 2014, rising from the last 5 sessions. Crude oil was supported by uncertainty over energy supplies, as supplies of coal, natural gas and crude appeared to be tightening.
Monday’s OPEC meeting only exacerbated the problem as the group reported no significant increases in oil production and decided to maintain its already existing schedule to avoid any major repercussions caused by another coronavirus wave.
However, the cartel can be pushed into a bind if demand continues to rise, leaving no choice but to increase production.
Rising oil prices will drive up gasoline prices, with the RAC warning that they could reach unprecedented heights before Christmas – bringing “misery” to motorists still reeling from the fuel shortage crisis.
Amid signs that the number of dry gas stations was dwindling, the drivers’ organization warned that concern over whether motorists could refill their tanks was likely to be replaced by concern over cost. .
RAC fuel spokesman Simon Williams said demand for oil exceeded supply as economies began to accelerate amid the easing of Covid restrictions, the increase being exacerbated by the Opec choosing not to increase oil flows significantly this week.
“[The trend] seems likely to add to the misery of the drivers at the pump as Christmas approaches… If that were to happen, we could see the average price of unleaded gasoline hit a new record high of around 143 pence per liter.
Diesel would hit 145p, which is only 3p off the record 147.93 in April 2021. “
The frenzy in the gas markets, where prices are rising day by day, is also pushing up crude, as countries may be forced to burn more oil instead.
Kim Kwangrae, senior commodities analyst at Samsung Futures Inc, explains (via Bloomberg)
“The tight supply outlook and additional demand for oil from countries in Europe and Asia seeking alternative fuels due to the global energy crisis have pushed up prices,” said
“Oil at $ 80 will become a psychological burden for some investors, potentially leading to a sell off if US government data shows crude stocks have risen as expected.”
These concerns also hit stocks; European stock markets are expected to open down around 0.7%.
Investors are awaiting the latest health check of UK carmakers and the eurozone, as well as a survey of private sector job creation in the United States ahead of Friday’s non-farm payroll report.
- 8:30 am BST: Euro zone construction PMI for September
- 9:30 am BST: UK construction PMI for September
- Noon BST: Weekly US Mortgage Applications
- 1:15 p.m. BST: US ADP survey on the private sector payroll in September
- 3:30 p.m. BST: EIA weekly oil inventory figures