Oil Peaks 7-Year Peak, Demand Omicron | Oil and Gas News

The West Texas Intermediate crude, which expires on Thursday, rose $ 1.53 to $ 86.96 a barrel in New York.

Oil has hit an all-time high since October 2014, when the International Energy Agency said the market was tighter than expected, with demand resistant to omicron.

New York futures closed 1.8% on Wednesday, the IEA said in a report that oil demand is on track to reach pre-pandemic levels. The agency said global warehouses are declining rapidly as demand continues to be strong and the OPEC + coalition is struggling to boost production. This means that production may be lower or consumption may be higher according to market estimates.

“The market has already put prices on a tighter market by 2022, and the IEA and other agencies are getting that,” said Rebecca Babin, senior energy marketer at CIBC Private Wealth Management. Oil could further extend its rally, “because the risks of events in a tight market could lead to large upward movements.”

An explosion on Tuesday tore down a key pipeline from Iraq to Turkey, selling more than $ 87 a barrel in the future.

Oil markets have tightened in recent weeks due to higher-than-expected demand and disruptions from OPEC + producers, including Libya, as Asian buyers have paid significantly higher premiums for spot charges.

In addition, concerns about the impact of the Covid-19 omicron variant are being alleviated, global storage is shrinking, and unrest in the Middle East has returned to radar after a drone attack on oil facilities in the United Arab Emirates. Earlier this year, Goldman Sachs Group Inc. raised its Brent global benchmark forecast by forecasting $ 100 worth of oil in the third quarter.

Prices

• West Texas Intermediate’s delivery for February, which ends Thursday, rose $ 1.53 to settle at $ 86.96 a barrel in New York.
• Contract premiums for the March futures, known as the immediate spread, rose to more than $ 1 a barrel, the strongest since mid-November.
• For the March settlement, Brent rose 93 cents to settle at $ 88.44 a barrel

The oil rally, however, poses a challenge for consumer nations and central banks as they try to ward off inflation while supporting global growth. The White House intends to continue to monitor prices and hold talks with the Organization of the Petroleum Exporting Countries and its allies, as required by the National Security Council spokesman, said Tuesday.

• The IEA said in its report that global oil inventories had fallen in the last 12 months. Warehouses have shrunk by more than a trillion barrels since their peak in May 2020 and are well below pre-pandemic levels, according to the report.

“Mobility and demand have generally been fairly well maintained,” said Daniel Hynes, chief strategist of raw materials for Australia and New Zealand Banking Group Ltd., in an interview with Bloomberg Television. “The supply picture is looking very tight, which will keep these markets fairly well protected,” he added.

Other market news:

• Royal Dutch Shell Plc is preparing for major works at the Pernis refinery in the Netherlands, the largest oil processing facility in Europe.
• OPEC and its allies are increasing oil production, but they cannot solve all the problems in the sector alone, the United Arab Emirates Energy Minister said.
• Airline traffic in Europe has weakened this month and wider international air travel is far from pre-pandemic levels as it approaches or reaches the highest level of infection caused by the widespread omicron variant in countries around the world.