By Adedapo Adesanya
Crude oil prices rose on Friday on the back of sustained global energy, causing the Brent crude to increase by 44 cents or 0.54 per cent to $82.39 per barrel, while the United States West Texas Intermediate (WTI) gained 1.34 per cent or $1.05 to $79.35 per barrel.
The surge in the prices of the commodity as well as natural gas and coal in recent days has been due to an energy crunch affecting Europe and Asia.
Benchmark European gas prices at the Dutch TTF hub on Friday stood at a crude oil equivalent of about $200 a barrel.
With worldwide demand growing as economic activity rebounds from lows brought by the coronavirus, the Organisation of the Petroleum Exporting Countries and allied producers (OPEC+) this week said they would remain on the path of gradually bringing back production.
This boosted the market at the start of the week with the alliance opting to stick to a prior agreement to raise production by a modest 400,000 barrels per day in November despite the recent fuel shortage.
Ahead of that meeting, some thought the group might opt to bring more production online to meet rising demand but concerns that demand for oil may weaken in the future was one of the reasons OPEC+ decided to stick with its original agreement.
Another reason was the higher revenues that all oil-producing countries are enjoying because of the oil price rally, which they did not want to bring about trouble like last year’s price crash.
Crude also got a boost Thursday after the US Department of Energy said it has no current plans to tap the Strategic Petroleum Reserve (SPR) in an effort to cool rising prices.
Prices are also getting more support from the US doing better than the rest of the world with its recovering economy, with its oil consumption now back to the level it was before the pandemic.
In addition, US shale production growth has not been fast enough to return to 2019 levels as an investment in new wells is slower with exploration and production shareholders seeking a more immediate return on their investment.
Due to the bullish environment, Commerzbank raised its forecast for Brent crude prices in the current quarter to $85 a barrel from its previous forecast of $75 and lifted its first-quarter 2022 estimate to $75 a barrel from $70.
Market analysts also pointed out that an acceleration in gas-to-oil switching could further boost crude oil demand used to generate power this coming northern hemisphere winter.
