Oil prices rise, set for multi-week gains

15 Oct Oil prices rise, set for multi-week gains

Oil prices climbed on Friday, heading for gains of more than 2% for the week, on increasing signs of robust demand and tighter supplies over the next few months as rocketing gas and coal prices stoke a switch to oil products.

Brent crude futures rose 62 cents, or 0.7%, to $84.62 a barrel at 0622 GMT, after picking up 82 cents in the previous session. Front-month prices are set to rise for the sixth straight week, up 2.7% this week.

U.S. West Texas Intermediate (WTI) crude futures rose 56 cents, or 0.7%, to $81.87 a barrel, adding to an 87 cent jump on Thursday. The contract is heading for a 3.2% gain on the week, up for the eighth consecutive week.

Analysts pointed to a sharp drop in OECD oil stockpiles, to their lowest level since 2015. Demand has picked up with recovery from the COVID-19 pandemic, with a further boost coming from industry turning away from expensive gas and coal to fuel oil and diesel for power.

The International Energy Agency on Thursday said the energy crunch is expected to boost oil demand by 500,000 barrels per day (bpd). That would result in a supply gap of around 700,000 bpd through the end of this year, until the Organization of the Petroleum Countries and allies, together called OPEC+, add more supply, as planned in January.

“This energy crisis, particularly in coal and gas, has really pushed up the energy complex higher and oil has benefited as a result,” said Commonwealth Bank commodities analyst Vivek Dhar.