Brent crude finished the session higher 21 cents, or 0.3%, at $75.67 per barrel. On Wednesday, Brent reached $76.13, its highest after July 30.
U.S. West Texas Intermediate (WTI) closed the session fixed at $72.61 per barrel after rising to the highest after Aug. 2 on Wednesday.
According to Craig Erlam, senior market analyst at OANDA, we see some profit-taking hitting in with prices now back around summer highs. Still, the rally proceeds to look well maintained.
U.S. Gulf energy companies have recovered pipeline service and electricity promptly following Hurricane Nicholas passed through Texas early this week. This enabled them to concentrate on attempting to correct the damage made weeks earlier by Hurricane Ida.
According to Rystad Energy analyst Nishant Bhushan, as Nicholas spared U.S. production from additional disorders, it isn’t easy to see how oil prices can rise further in the coming term. Ida-affected oil output capacity extends to recover in the U.S.
Oil surged on Wednesday. It was backed by figures revealing U.S. crude inventories dropped by a bigger-than-expected 6.4 million barrels last week. Meanwhile, offshore oil facilities are still growing from Ida’s impact. [EIA/S]
Brent has returned about 45% this year. It received a boost from supply reductions by the Organization of the Petroleum Exporting Countries (OPEC) and its partners, plus some improvement from last year’s epidemic-related breakdown in demand.
Influence on Oil
Oil is also getting support from a rise in European power prices. It has soared due to weak gas inventories and lower-than-normal gas supply from Russia.
Benchmark European gas prices at the Dutch TTF hub have increased by higher than 250% after January.
The price surge and impact on oil are a place that will get much more severe before it gets better, stated Jeffrey Halley, an analyst at OANDA.
Replying to signs of oil demand recovery, a closely observed OPEC and International Energy Agency report this week stated global oil use would grow over 100 million barrels by day. This is a level last touched in 2019, as soon as next year’s second quarter.
According to Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, many of the OPEC and IEA arrangements are longer-term in nature. Nevertheless, they are deserving of some buying interest notwithstanding significant demand uncertainty across the balance of this year compared to the Delta variant (of the COVID-19).