U.S. Crude Breaches $80 On Energy Fears As Yawger Likens Trading To Panic Buying

Meanwhile, critics say Europe is now an "energy hostage" of Russia: File Image/Pixabay

For the first time since November of 2014, U.S. crude on Friday briefly topped $80 - a level many analysts say is unsustainable and threatens demand recovery - due to ongoing worries about global supply tightening as well as a disappointing jobs report, which weakened the dollar.

The benchmark also posted a seventh straight weekly gain, the longest stretch of advances since December.

West Texas Intermediate ultimately settled up $1.05 to $79.35 per barrel, while Brent settled up 44 cents to $82.39 per barrel.

Additionally, WTI's nearest contract traded at the biggest premium to second-month futures since August, a sign of rising demand as many countries substitute fuel oil for natural gas as quickly as possible to prepare for winter.

Bob Yawger, director of the futures division at Mizuho, said, "It's a panic buyer's situation: They don't need to buy it a month from now, they needed it yesterday."

Although worry over the energy crunch was somewhat alleviated earlier this week when Russian president Vladimir Putin offered to increase his country's gas supplies to Europe, Adeline Van Houtte, Europe analyst at the Economist Intelligence Unit, said in a note, "Currently, the Russian domestic gas market remains tight, with its inventories running low, output already near its peak and winter looming in Russia as well, limiting gas export capacity.

"There is also little sign that Gazprom - the Russian gas export pipeline monopoly, which supplies 35 percent of European gas needs - is attempting to pump more gas to Europe's spot buyers via existing routes, and overall given its small room for manoeuver, it is unlikely that Gazprom could deliver more than around 190 billion cubic meters to Europe this year."

Critics noted that because the controversial Nord Stream 2 gas pipeline bringing more Russian gas to Europe via the Baltic Sea is now completed and awaits certification, Europe's energy security has been compromised and the former Soviet Union could use energy supplies as leverage over the region.

Timothy Ash, emerging markets senior sovereign strategist at Bluebay Asset Management, likened the situation to being taken hostage and called it "unbelievable," with "Europe (and the U.K.) too weak to call it out and do anything about it."