Brent oil near three-year high with traders eyeing stockpiles

Oil traded near its highest level since 2018 amid expectations that stockpiles will continue to decline globally as OPEC+ keeps a tight rein on supply.

Brent crude edged lower from its highest close in three years. Later Tuesday, the American Petroleum Institute will report estimates for U.S. oil inventories, including at the key hub in Cushing, Okla.

Brent for December settlement fell 0.6 per cent to $85.45/bbl at 10:24 a.m. in London. WTI for December delivery eased 56 cents $83.20/bbl.

The Organization of Petroleum Exporting Countries and its allies are due to gather next week to assess output policy against a market backdrop in which investors are expecting even higher prices. Larry Fink, chairman and chief executive officer of BlackRock Inc., the world’s largest asset manager, said there’s a high probability that crude could hit $100/bbl.

Oil in both London and New York is set for a monthly gain as global demand recovers from the pandemic and amid a broader energy crunch. While OPEC is gradually easing output curbs, Wall Street has been looking nervously at global spare capacity. Most banks now see crude trading higher for a longer period of time as demand recovers, but underinvestment in new supplies means production could fail to keep pace, a concern shared by BlackRock’s Fink.

“Short-term policy related to environmentalism, in terms of restricting supply of hydrocarbons, has created energy inflation, and we are going to be living with that for some time,” Fink said at the Saudi Future Investment Initiative conference.

© 2021 Bloomberg L.P.

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