Skyrocketing prices for natural gas, coal and electricity are putting extra pressure on oil markets, boosting demand as industries and power generators seek to switch to liquid fuels to keep a lid on costs. But don’t expect the oil producers to boost supplies more rapidly over the coming winter — they’re more worried about what might happen next year.
Fuel switching from gas and coal will boost global oil demand by 500,000 barrels a day during the northern hemisphere winter. That’s the consensus view emerging from analysts at the International Energy Agency, Citigroup, UBS, and elsewhere. But producers are sticking to production plans they made back in July.
The additional demand is causing many of those same analysts to raise their oil price forecasts (the IEA doesn’t forecast prices). That’s great news for the oil producers, led by Saudi Arabia and Russia, who are refilling their coffers after the huge drops in revenues they suffered last year. But it’s still not yet enough for them to consider opening the taps faster than they have already planned.
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