Oil relaxes as investors gain after five-day rally

Texas News Today

FILE PHOTO: Employees hold a sample of crude oil at the Yarkta field, owned by the Irkutsk Oil Company, in the Irkutsk region of Russia on March 11, 2019. Reuters / Vasily Fedosenko / File photo

September 28, 2021

Yuka Obayashi

TOKYO (Reuters) – Oil markets remain strong amid tight supplies, but investors are worried rising prices could weaken demand for the fuel as it eased on Tuesday after a five-day response.

On Monday, Brent crude oil futures rose 1.8% to their highest level since October 2018, then fell 17 cents (0.2%) to $79.36 a barrel as of 0121 GMT.

West Texas Intermediate (WTI) crude futures fell 9 cents (0.1%) to $75.36 a barrel, the highest since July a day earlier.

“After a long rally, the oil market has bottomed out and some investors have made gains,” said Toshitaka Tajawa, an analyst at Fujitomi Securities. added.

“Nevertheless, market sentiment remains strong due to tight supply,” he said, predicting that Brent could try $80 a barrel soon.

Africa’s top oil exporters, Nigeria and Angola, say they will struggle to raise production to OPEC quota levels, at least until next year, as low investment and intolerable maintenance issues hamper production. Oil company sources have warned.

His fight to support prices when COVID-19 reaches demand has led to production cuts over the past year, but production will increase to meet the growth in global fuel demand as the economy recovers. It depicts the battle of other members of the OPEC+ group who could not.

To increase investors’ risk appetite, Goldman Sachs raised its year-end forecast for Brent crude oil by $10 to $90 a barrel. Global supplies are tight due to a rapid recovery in fuel demand from the outbreak of the delta variant of the coronavirus and the impact of Hurricane Aida on US production.

Analysts said rising spot liquefied natural gas (LNG) and coal prices could also propel oil prices further.

“Rising gas prices have forced us to switch from gas to oil consumption, resulting in an additional 500,000 barrels of oil per day, or the global oil supply,” said Wibek Dahl, commodities analyst at the Commonwealth Bank. It may increase by 0.5% of the amount. ”

“This is expected to further strengthen the oil market, with supplies remaining fairly conservative, especially from OPEC+,” he said, adding that if northern hemisphere winters are cooler than expected, energy prices from here begins. He said it could increase.

(Reporting by Yuka Obayashi, edited by Stephen Coates)

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