Author of the article:
Reuters
Bozorgmehr Sharafedin
LONDON — Oil prices rose on Tuesday, supported by the prospect of tight inventories across the globe, although the gains were capped by forecasts of an increase in global production in coming months and concerns over rising coronavirus cases in Europe.
Brent crude was 32 cents, or 0.4%, higher at $82.37 a barrel, by 1025 GMT, and U.S. West Texas Intermediate (WTI) crude climbed 22 cents, or 0.3%, to $81.10 a barrel.
“At these oil prices, supply is going to grow but it might take six months and inventories have come down so low. We don’t have a safety margin,” said Tony Nunan, a senior risk manager at Mitsubishi Corp.
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“We have very low inventory levels and if we have a very cold winter and OPEC is still sluggish at increasing supplies that could push oil prices up.”
Global oil markets remain very tight as demand returns to pre-pandemic levels, Trafigura’s Chief Executive Officer Jeremy Weir said.
“It’s not artificially tight because of what OPEC is doing. Demand is there,” Weir said at the FT Commodities Asia Summit.
However, the International Energy Agency (IEA) said the oil market rally may ease off as high prices could provide a strong incentive to boost production, particularly in the United States.
The IEA said it expected average Brent prices to be around $71.50 per barrel in 2021 and $79.40 in 2022.
OPEC Secretary General Mohammad Barkindo also said on Tuesday that he expects an oil supply surplus as early as December and the market to remain oversupplied next year.
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“The surplus is already beginning in December. These are signals that we have to be very, very careful,” he said.
The Organization of the Petroleum Exporting Countries (OPEC) last week cut its world oil demand forecast for the fourth quarter by 330,000 barrels per day (bpd) from last month’s forecast, as high energy prices hampered economic recovery from the COVID-19 pandemic.
Still, worries about demand destruction due to the COVID-19 pandemic weighed.
Europe has again become the epicenter of the COVID-19 pandemic, prompting some governments to consider re-imposing lockdowns, while China is battling the spread of its biggest outbreak caused by the Delta variant.
(Reporting by Bozorgmehr Sharafedin in London, additional reporting by Naveen Thukral and Roslan Khasawneh in Singapore; Additional reporting by Florence Tan; Editing by Kenneth Maxwell, Kirsten Donovan)
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Author of the article: Reuters Bozorgmehr SharafedinLONDON — Oil prices rose on Tuesday, supported by the prospect of tight inventories across the globe, although the gains were capped by forecasts of an increase in global production in coming months and concerns over rising coronavirus cases in Europe.Brent crude was 32 cents, or 0.4%, higher at $82.37 a barrel, by 1025 GMT, and U.S. West Texas Intermediate (WTI) crude climbed 22 cents, or 0.3%, to $81.10 a barrel.“At these oil prices, supply is going to grow but it might take six months and inventories have come down so low. We don’t have a safety margin,” said Tony Nunan, a senior risk manager at Mitsubishi Corp.Advertisement This advertisement has not loaded yet, but your article continues below.“We have very low inventory levels and if we have a very cold winter and OPEC is still sluggish at increasing supplies that could push oil prices up.”Global oil markets remain very tight as demand returns to pre-pandemic levels, Trafigura’s Chief Executive Officer Jeremy Weir said.“It’s not artificially tight because of what OPEC is doing. Demand is there,” Weir said at the FT Commodities Asia Summit.However, the International Energy Agency (IEA) said the oil market rally may ease off as high prices could provide a strong incentive to boost production, particularly in the United States.The IEA said it expected average Brent prices to be around $71.50 per barrel in 2021 and $79.40 in 2022.OPEC Secretary General Mohammad Barkindo also said on Tuesday that he expects an oil supply surplus as early as December and the market to remain oversupplied next year.Advertisement This advertisement has not loaded yet, but your article continues below.“The surplus is already beginning in December. These are signals that we have to be very, very careful,” he said.The Organization of the Petroleum Exporting Countries (OPEC) last week cut its world oil demand forecast for the fourth quarter by 330,000 barrels per day (bpd) from last month’s forecast, as high energy prices hampered economic recovery from the COVID-19 pandemic.Still, worries about demand destruction due to the COVID-19 pandemic weighed.Europe has again become the epicenter of the COVID-19 pandemic, prompting some governments to consider re-imposing lockdowns, while China is battling the spread of its biggest outbreak caused by the Delta variant.(Reporting by Bozorgmehr Sharafedin in London, additional reporting by Naveen Thukral and Roslan Khasawneh in Singapore; Additional reporting by Florence Tan; Editing by Kenneth Maxwell, Kirsten Donovan)Financial Post Top StoriesSign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc. By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300