Oil leapfrogs 2% on tight supply as Brent nears $80 a barrel

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Oil leapfrogs 2% on tight supply as Brent nears $80 a barrel

On Monday, both US WTI (West Texas Intermediate) and UK crude oil contracts’ prices had eked out more than 2.0 per cent in gains with Brent crude breaching its strongest since October 2018 and glibly heading towards $80 a barrel, extending a latest leg of blowout rally into a fifth straight session in a row.

In point of fact, in the day’s Herculean rally in crude oil futures’ prices was almost entirely catapulted by a growing investors’ fret over a squeezed supply chain, as demands were reportedly spurring up all over the globe ahead of a busy holiday season.

Adding to further impetus, heavy-weight US lender Goldman Sachs had raised its end-2021 forecast for Brent crude to $90 per barrel, as global demands have heightened up much earlier-than-anticipated despite a flare-up in delta cases and a substantial scale of US Gulf of Mexico output had still been hindered due to back-to-back hurricanes.

Besides, Goldman Sachs said in a report on Monday, “While we have long held a bullish oil view, the current global supply-demand deficit is larger than we expected, with the recovery in global demand from the Delta impact even faster than our above-consensus forecast and with global supply remaining short of our below consensus forecasts”.

Adding further bullish breezes on to a soaring black gold contracts’ prices, OPEC+ alongside its Russia-led allies were reportedly failing to raise output due to a global-scale supply chain issue, eventually faring well for crude oil futures’ prices.

Crude oil extends blistering rally into a fifth straight session

Citing statistics, in the day’s commodity market wind-down, UK crude had rounded off the session 1.8 per cent higher to $79.53 a barrel, while US WTI crude oil futures’ prices jumped 2.0 per cent to settle down at $75.45 a barrel, the strongest level since July.

On top of that, Natgas futures’ prices jumped more than 10.0 per cent to $5.86 per MMBtu (Metric Million British Thermal Unit) as supply worries teeter.