Strong prices for gas, liquefied natural gas and oil are expected to last over winter: File Image/Pixabay
Oil prices on Thursday levelled off after the latest worry that had galvanized traders in earlier sessions - Hurricane Nicolas - proved not to be a threat at all to U.S. Gulf crude production.
Brent ended the session up 21 cents, or 0.3 percent, at $75.67 per barrel; West Texas Intermediate ended the session unchanged at $72.61 per barrel.
With Hurricane Nicolas causing flooding but no significant infrastructure damage, energy companies have been able to continue focusing on repairing the damage caused weeks earlier by Hurricane Ida.
Craig Erlam, senior market analyst, OANDA
The rally continues to look well supported
Craig Erlam, senior market analyst at OANDA, said, "With prices now back around summer highs, we are seeing some profit taking kicking in, but the rally continues to look well supported."
Oil prices were also said to have been supported by a surge in European power prices, due to low gas inventories and lower-than-normal gas supply from Russia (benchmark gas prices at the Dutch TTF hub have risen by more than 250 percent since January).
Also on Thursday, Bloomberg noted that investor optimism is being reflected in the widening of key oil timespreads into a stronger bullish backwardation structure: West Texas Intermediate for December delivery jumped to the widest premium to the December 2022 contract since July.
And while there's no end of continued grim headlines pertaining to the Delta variant, traders took heart in the Organization of Petroleum Exporting Countries (OPEC) and the International Energy Agency forecasting this week said global oil use would rise above 100 million barrels per day (bpd), a level last reached in 2019, as soon as next year's second quarter.
Indeed, accounts of the Delta surge abating are now daily, with hospitalization rates in the U.S. dropping in key hot zones such as Florida and plummeting in Los Angeles.
Mike Worth, CEO of Chevron Corp., speculated that strong prices for gas and liquefied natural gas in addition to oil are expected to last "for a while" because U.S. producers are opting not to drill again in the near-term; Norway's Equinor ASA said Thursday it expects European gas prices to remain high over winter.