Crude oil prices made record gains at the end of last week, to record the highest level in three years, due to the disruption of US production and the collapse of oil inventories to the lowest level since October of 2018.
Brent crude achieved the third weekly gain in a row, and US crude recorded the fifth weekly gain, and the number of oil and gas drilling rigs increased for the 14th consecutive month.
The Organization of Petroleum Exporting Countries (OPEC) is preparing to release its annual outlook report for 2021, on Tuesday, amid a state of positive market sentiment and the continued recovery of demand for crude oil, which is expected to continue in the coming months.
At the same time, the energy ministers of the “OPEC +” group are preparing for a new ministerial meeting on October 4, amid widespread pressure from consumers to increase oil supplies further in light of the disruption of American production and the continued jumps in crude oil prices, which pushed Brent crude To record a level above $78 a barrel at the end of last week.
In this context, the international “World Oil” report stated that crude oil maintained its gains near its highest levels since 2018, amid a global energy crisis that is already increasing, and due to the strength of global demand for crude oil, while oil stocks are declining in both the United States and China, He pointed out that the rise in natural gas prices will force some consumers to switch to oil, further tightening the market ahead of the Northern Hemisphere winter.
The report stated that oil futures contracts recorded a third weekly increase, while global onshore crude oil stocks fell by 21 million barrels last week, led by China, indicating that US stocks approached their lowest level in three years.
He pointed out that China held the first auction of crude from its strategic reserves, and oil prices recently rose after a period of uncertainty in demand caused by the spread of the Corona pandemic, while some of the largest traders in banks around the world expected that prices may rise more due to the energy crisis.
The report pointed out that global crude oil consumption could rise by an additional 370,000 barrels per day if natural gas remained high for a long time, according to estimates by the Organization of the Petroleum Exporting Countries, noting that the various basic crude oil market measures also draw attention to the existence of a stronger market, explaining The main spread between the futures contracts for Brent crude for December and a year later is close to seven dollars, which is the strongest since 2019.
The report indicated that traders – in general – are optimistic about the market outlook, as the downside selling odds are the smallest since January 2020, yet this is another indication that traders are less concerned about falling prices.
He noted that about four weeks after Hurricane Ida, which struck Louisiana, oil producers in the Gulf of Mexico are still far from completely getting rid of all the losses and repercussions of the devastating hurricane.
And he quoted official US data confirming that 31 platforms are still closed with a loss of 294.414 barrels of oil in general, as the hurricane at the end of August destroyed 30.1 million barrels, making Ida the most destructive for oil operators in 13 years.
The report stated that the loss in production contributed to the rapid reduction of oil market supplies, and that US oil stocks are the lowest since 2018, while stocks in Europe are still below average levels for this time of year.
He pointed to the rise in global crude oil indicators steadily this month, as Brent crude futures reached the highest price in nearly three years, explaining that Hurricane Ida no longer poses a threat to oil and gas activities in the Gulf of Mexico, but it is not expected to recover. Full production until next year.
He cautioned against the assertion of the global energy giant, “Royal Dutch Shell” – which is one of the largest producers in the Gulf of Mexico – that while one of its platforms will resume work in the next quarter, the other two will not be able to restart until the first quarter of 2022.
The report stated that while the global natural gas crisis hits suppliers and consumers alike, the “OPEC” countries warn of the harmful impact on oil markets, pointing to the statement of Iraqi Oil Minister Ihsan Abdul-Jabbar that Iraq expects an increase in demand for crude oil, as the shortage of gas forces consumers On the search for alternative fuels.
The report quoted that the demand for crude oil could rise by one million barrels per day, with the possibility of rising prices by ten dollars per barrel during the next six months.
He pointed out that Brent crude futures contracts have already recorded the level of $ 75 a barrel, approaching the peak this year, pointing to estimates issued by the “Goldman Sachs” group confirming that the cold winter could overwhelm the ability of the oil market to compensate for the lack of gas supplies, which leads to higher prices. With repercussions on the economy.
He added, quoting the bank, that about two million barrels of oil per day are needed to meet the needs of consumption, which is a mixture of power generation and industrial purposes. of crude oil supplies, which were interrupted when the pandemic hit the world last year, pointing out that it may be a golden opportunity especially for Iraq, which is eager to maximize sales after it was sharply reduced by years of conflict.
On the other hand, with regard to prices, at the end of last week, oil prices rose for the third week in a row, reaching the highest level in three years on Friday, as disruptions in global production forced energy companies to withdraw large quantities of crude from inventories.
Brent crude futures rose 84 cents, or 1.1 percent, to settle at $78.09 a barrel, while US West Texas Intermediate crude rose 68 cents, or 0.9 percent, to a settlement price of $73.98.
This is the highest close for Brent since October 2018 and for WTI since July 2021, both higher for the second day in a row.
This was the third week of gains for Brent and the fifth for WTI due to disruption to production in the US Gulf Coast by Hurricane Ida in late August.
“With oil prices heading to complete another week of gains, the market is bearing in mind the long-term impact of supply disruptions and the potential drawdown of inventories, which will be necessary to meet refinery demand,” said Louise Dixon, senior oil market analyst at Rystad Energy.
US energy companies added ten oil drilling rigs this week, raising the number of oil and gas rigs for the 14th consecutive month.
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