Global benchmark Brent crude approached $85 a barrel as a growing power crisis from Europe to Asia boosts demand for oil ahead of winter.
Brent futures rose as much as 2.7% to the highest since October 2018 on Monday. Prices of coal and natural gas have surged globally with stockpiles running low before the Northern Hemisphere winter, prompting some switching to oil products such as diesel and fuel oil.
It is quickly tightening the market as the Organization of Petroleum Exporting Countries and its allies are sticking with their plan to only gradually roll back production cuts. The oil market’s price structure is flashing bullishness, with the difference between New York crude’s front two contracts surging to the widest in more than two years, indicating shrinking supplies in the U.S. storage hub of Cushing, Oklahoma.
“There is definitely this fear of the supply side going to dry up,” said Fiona Cincotta, senior financial markets analyst at City Index. Even OPEC adding back supply to the market is not “necessarily going to have a massive impact on cooling the price of oil. Oil to $90 is clearly in sight.”
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