By Adedapo Adesanya
Oil traded mixed on Monday as tight global supply and strengthening fuel demand in the United States and beyond supported prices, just as oil producers remained cautious about adjusting their approach.
Brent crude rose by 22 cents or 0.26 per cent to trade at $85.75 per barrel while on the other hand, the US West Texas Intermediate (WTI) crude lost 28 cents or 0.33 per cent to sell at $83.48 per barrel.
The global energy supply crunch continues to move oil prices upward this week, a result of traders pricing in the ongoing rise in fuel demand.
The market is also holding onto worries about coal and gas shortages in China, India and Europe, which spurred fuel-switching to diesel and fuel oil for power.
This is coming as demand in the US is back in line with five-year averages in the world’s largest fuel consumer having recovered swiftly from the worst days of the pandemic in 2020.
Just as this is happening, the Organisation of the Petroleum Exporting Countries and allies (OPEC+) has said it needs to remain cautious with its approach to oil production adjustments despite rising prices.
This was made known by the Saudi Arabia oil minister and co-chair of the group, Mr Abdulaziz bin Salman, explaining that higher production is only justifiable when there is a clear purpose for it, something he said was not needed at the moment.
The energy minister also said he expected a significant increase in combined OPEC+ oil supply by the end of next year, even without the hypothetical return of Venezuela or Iran to international markets.
OPEC+ is adding 400,000 barrels per day to its combined output every month, but some members have found it difficult to boost production, and this has resulted in over compliance with the voluntary cuts and continued tight supply.
However, the cartel has so far resisted calls for a greater boost in output to catch up with demand.
A top investment bank, Goldman Sachs, said a strong rebound in global oil demand could push Brent crude prices above its year-end forecast of $90 a barrel. It also estimated that gas-to-oil switching could contribute at least one million barrels per day to oil demand.
Modupe Gbadeyanka