Oil gains from highest close in seven years as U.S. dollar falls

Oil continued its advance from the highest close in seven years as the U.S. dollar fell and investors assessed the energy crunch roiling global markets.

Futures in New York surpassed $83/bbl Tuesday, gaining as much as 1.4 per cent from Monday’s settle at the highest since October 2014. Russia is keeping a tight grip on gas supplies to Europe and OPEC+ hasn’t pumped enough crude to meet its production target, exacerbating an existing supply crunch in energy markets.

West Texas Intermediate for November delivery rose to US$83.55/bbl on the New York Mercantile Exchange at 10:50 a.m. London time. Brent for December settlement added 0.9 per cent to $85.11.

Crude has risen for the past eight weeks as the energy crisis — prompted by shortages of natural gas and coal — coincided with a rebound in demand from key economies emerging from the pandemic. Stockpiles are expected to draw this quarter, tightening the market further, although there are signs that higher energy prices are hurting industrial output in Europe and Asia.

“The tight physical oil balance should prevail, and prices are to remain at elevated levels for the remainder of the year,” PVM Oil Associates Ltd. analyst Tamas Varga wrote in a note.

© 2021 Bloomberg L.P.

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