Oil futures kicked off the week with solid gains Monday, pushing Brent crude above $85 a barrel and within striking distance of its 2018 high as concerns over tight supplies show no signs of abating.
West Texas Intermediate crude for November delivery
CL00,
CLX21,
rose $1.27, or 1.5%, to $83.55 a barrel on the New York Mercantile Exchange, trading at levels last seen in 2014. December Brent crude
BRN00,
BRNZ21,
the global benchmark, ws up 81 cents, or 1%, at $85.67 a barrel. Brent traded as high as $86.04 a barrel, not far off its September 2018 high of $86.74 — a push above that level would see Brent also trading at a seven-year high.
Crude has rallied, with the current leg higher driven by worries over tightening supplies as soaring prices for coal and natural gas lead power generators, particularly in Asia, to begin burning oil.
Meanwhile, the Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+, continued in September to struggle to raise output in line with plans. OPEC+ previously agreed to relax output curbs in monthly increments of 400,000 barrels a day.
OPEC+ in September saw compliance with cuts at 115%, according to Reuters, down from 116% in August. That shows some OPEC+ members are struggling to increase output “due to lack of operating capacity or other production-related issues,” said Warren Patterson, head of commodities strategy at ING, in a note.
“Overcompliance by the OPEC+ on output cuts have been helping crude oil supplies to remain tight,” he wrote, citing Bloomberg data showing that the group has underproduced around 740,000 barrels a day of crude oil in September 2021 compared with the agreed production limit.
Meanwhile, Chinese economic data showed the world’s second-largest economy grew 4.9% over a year earlier in July-September, down from the previous quarter’s 7.9%, restrained by a slowdown in construction activity and curbs on factory output as a result of energy shortages.
This post was originally published on Market Watch
