Oil prices consolidate their gains by 1%.. Brent crude is above $85

  • 22 October, 2021
  • 5:20 pm EEST

Oil prices extended their gains to about 1% during trading today, Friday, after falling in early trading, to bring Brent crude back above $ 85, in conjunction with the decline of the US currency.

The decline came this morning as demand for oil products in electricity generation slowed, amid falling coal and gas prices, while the US expected a mild winter as well.


Oil Prices Today

By 12:05 pm GMT (03:05 pm Mecca Al-Mukarramah), the price of Brent crude futures – for December delivery – rose by about 1%, recording $85.44 a barrel.

The benchmark crude is trying to compensate for the losses it suffered, after it retreated from its highest level since October 2018, recorded in yesterday’s session at $86.

The prices of West Texas Intermediate crude futures – for December delivery – also rose by about 1%, to the level of $ 83.23 a barrel, after falling at the beginning of today’s session less than $ 82 a barrel.


Oil Demand

“Crude oil saw some correction, as part of a commodity selling off, amid renewed virus fears and expectations of a milder winter in the US,” said Ravindra Rao, Vice President of Commodities at Kotak Securities.

Winter weather across much of the United States is expected to be warmer than average, according to the National Oceanic and Atmospheric Administration’s forecast.

The market hit multi-year highs earlier in the week, as concerns about coal and gas shortages in China, India and Europe prompted a shift to diesel and fuel oil for power generation.

“The sharp rise in crude oil may make it vulnerable to profit taking, however, a significant correction may not occur unless the global energy crisis subsides,” Rao said.

He pointed out that global gas and coal prices have declined, but concerns remain with the tightening market and increased demand for the impending winter.


US Oil Stocks

US crude found support earlier this week, as investors looked to lower crude stocks at a major storage hub in Cushing, Oklahoma.

“There are clear concerns about the inventory depletion we are seeing at the WTI delivery hub, Cushing,” ING commodity strategists said in a note.

And data from the US Energy Information Administration showed, last Wednesday, that oil stocks in Cushing fell to 31.2 million barrels, the lowest level since October 2018.

“In the broader future, oil prices should rise due to the supply and demand relationship, but the bullish sentiment sparked by the sudden withdrawal of US inventories may have been absorbed,” said Leona Liu, an analyst at Singapore-based DailyFX.


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