Oil Gains As Analysts Contemplate Possibility Of OPEC Acting To Stop Energy Crunch

by Ship & Bunker News Team
Thursday October 7, 2021

More gains for crude on Thursday contributed to the commodity rallying more than 15 percent since mid-August, with the latest motivation for traders being the U.S. Energy Department claiming it has no plans to the country's oil reserves in order to quell rising fuel prices.

West Texas Intermediate crude settled 87 cents higher at $78.30 per barrel, while Brent also settled 87 cents higher at $81.95 per barrel.

Although Washington's announcement caused some consternation amid what many believe is an inevitable global energy crunch heading into winter, Amrita Sen, chief oil analyst at Energy Aspects Ltd., pointed out that "The key to remember is that the Biden administration is very keen on having low gasoline prices for consumers, so if prices continue to go up and overheat, then they will be putting pressure on OPEC."

Indeed, Citigroup Inc. on Thursday said it's only a matter of time before the Organization of the Petroleum Exporting Countries, which earlier opted to maintain an increase of only 400,000 barrels per day (bpd) for next month, accelerates supply increases - especially if oil remains over $80 per barrel.

Covid concerns continued to be eclipsed by the latest analytical fear of energy supplies being severely constrained in the near term, and this was exacerbated by the Energy Information Administration declaring that U.S. diesel stockpiles are at a 20-year low.

For the long term, Moody's Investors Service contributed to the angst by stating on Thursday that oil explorers need to raise drilling budgets by 54 percent to over half a trillion dollars in order to stall a significant supply deficit in the next few years.

Moody's added that while international crude and U.S. gas have risen more than 50 percent and 120 percent this year respectively, drilling outlays are only forecast to increase by 8 percent globally -  too little to replace what those companies will pump in 2022.