Brent crude oil closes to $85/barrel as energy crisis worsens

The price of Brent crude oil and US WTI crude oil continued to increase and approached the $85/barrel mark in the context of Europe and Asia still struggling to find energy supplies for the winter.

Brent oil traded by Asian hours was stable at 83.61 USD/barrel in the afternoon session of October 12. Photo: AFP

Oil prices traded in Asian hours this afternoon, October 12, decreased, but not significantly. Brent crude futures were steady at $83.61 per barrel, while US WTI futures slid 0.15% to $80.40 per barrel.

Oil prices recently jumped after the Organization of the Petroleum Exporting Countries (OPEC) and its allies (collectively known as OPEC+) made a decision last week that went against the expectations of oil-consuming economies, because the alliance agreed to keep the production increase of 400,000 bpd in the same place.

Meanwhile, the recovery in global demand contributed to power shortages in major economies, especially in China. China’s coal and electricity crisis was made worse by coal futures prices in the country hitting a new record on October 11 after 60 coal mines in the country’s top coal producing base were forced to close. doors due to heavy rains, floods, and landslides.

Specifically, coal futures prices (Mainly used to generate electricity) on the Zhengzhou Commodity Exchange hit an all-time high of 12% up to 1,408 yuan/ton (equivalent to 219 USD/ton) in trading day 11/10. This price is twice as high as at the beginning of the year.

The adverse weather developments for coal production in China come at a time when the world’s second-largest economy is grappling with a shortage of coal for power plants, and the risk of China’s slow economic growth.

On the other hand, after a slight slide at the end of last week, natural gas prices in Europe rebounded on the first trading day of the week, October 11th, as forecasts that the weather will be colder and the demand for natural gas appeared. heating will increase.

According to the latest data that the Dutch financial group ING cited from the European Gas Infrastructure Organization (GIE) report, gas storage locations across Europe are currently at only 76%, low much higher than the five-year average of nearly 91%.

The limited world supply of coal and natural gas has raised the prospect of a shift from gas to oil. This trend further pushes up the demand for oil and hence the price of oil also increases.

The crude oil market “started off strong this week as the global energy crisis continues to raise the prospect of a demand shift from gas to oil,” said strategists at Saxo Bank. , in the context that OPEC + still maintains a modest monthly output growth rate.”

This group of experts predicts that, as WTI has been trading at a seven-year high, Brent is most likely aiming for a 2018 high of $86.74 a barrel.

From a macroeconomic perspective, Mr. Tapas Strickland, economist at National Australia Bank (NAB) warned, energy prices recently The spike is raising concerns that the temporary spike in Covid-19 inflation may be lingering.