By Barani Krishnan
Investing.com – Winter may be months away, but markets being markets have the habit of forerunning things. Oil was running on that sentiment on Friday as crude prices closed up for the fifth week in a row, after nearing three-year highs during the session.
“When winter comes rolling in, there’s going to be a huge competition for pipeline space,” said Phil Flynn, analyst at Chicago’s Price Futures Group.
The combination of a slow comeback in U.S. oil production after last month’s Hurricane Ida, along with a shortage of butane to add to winter blends of gasoline “is creating a situation that is very bullish for petroleum and natural gas markets,” Flynn added.
New York-traded West Texas Intermediate, the benchmark for U.S. oil, settled up 68 cents, or 0.9%, at $73.98 per barrel. For the week, WTI rose 2.8%.
London-traded Brent crude, the global benchmark for oil, settled up 84 cents, or 1.1%, at $78.09. For the week, Brent gained 3.7%.It was a fifth straight week of gains for WTI and a fourth in five weeks for Brent, which are both up about 50% on the year.
Earlier in the session, WTI got to a peak of $74.27, its highest since October 2018. Brent, meanwhile, hit $78.24, setting a similar milestone.
Oil prices had trended higher since the start of the year but hit a bump in August on concerns over a new spike in Covid infections from the Delta variant and other demand issues.
Hurricane Ida, however, severely shutting down production on the U.S. Gulf Coast of Mexico. And supplies have only been crawling back since. As of Thursday, almost a month after the storm made landfall on Aug. 29, some 294,414 barrels equivalent of oil capacity, accounting for 16% of production on the Gulf, remained shut in.
“The market is pricing in a prolonged impact of supply disruptions, and the likely storage draws that will be needed to fulfill refinery demand,” said Louise Dickson, senior oil markets analyst at Rystad Energy.
Oil Nears 3-Year High on Bets Over Tight Winter Supply
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